Financing the Fleet
Neoclouds buy chips years before customers finish paying for them, so debt fills the gap. CoreWeave's delayed-draw term loans, held in special-purpose vehicles and secured on hardware and contracts, became the template, and by March 2026 one of them carried investment-grade ratings because the contract behind it was with Meta. The lesson is that lenders price the customer more than the chip. Depreciation is the other half: a six-year useful life on hardware from a supplier that now ships a new generation every year is a forecast about second contracts. Faraday's read is that the gap between accounting life and economic life is where optimism hides.
Knowledge check
What must be true for a six-year depreciation schedule on graphics processing units to prove accurate when the first customer contract lasts only four or five years?
Show the answer
The chips must be re-contracted after the first commitment ends at rates high enough to cover their remaining depreciation. That depends on demand for older generations holding up as Nvidia releases newer ones on a one-year rhythm. If older chips can only be rented cheaply, the six-year assumption overstates early profits and the shortfall appears later.