Nvidia shares slide as $750B in AI deals fuel financing fears

Nvidia ↘ 3.55% is advancing more than $750 billion in AI-related deals, a breakneck expansion that has intensified warnings from investors and analysts about the risks of "circular financing" — arrangements in which the chipmaker bankrolls the very companies buying its products.

A Cascade of Commitments

The deals, disclosed over recent days, span multiple continents and counterparties. Late Friday, Nvidia and South Korea's SK Group unveiled a partnership valued at more than $500 billion, encompassing Nvidia's purchases of memory chips from SK Hynix ↘ 2.60% and SK Group's acquisition of Nvidia supercomputers. "Between us, we're going to do half a trillion dollars' worth of business," CEO Jensen Huang told Bloomberg Television.

Separately, Nvidia is in talks to guarantee as much as $250 billion of OpenAI's lease on a $500 billion, 10-gigawatt data center hub that SoftBank Group subsidiary SB Energy is developing in Ohio, according to Bloomberg, which cited people familiar with the matter. Nvidia is also discussing financing $350 billion of OpenAI's chip purchases for the project. The Wall Street Journal first reported the discussions.

On Monday, Nvidia confirmed a "substantial" investment in Safe Superintelligence Inc., the AI research lab co-founded by former OpenAI chief scientist Ilya Sutskever. Reuters reported the commitment at $5 billion, giving SSI access to Nvidia's next-generation Vera Rubin platform. The Financial Times also revealed that Nvidia is the unnamed tenant behind leases worth up to $50 billion at Hut 8's ↘ 12.81% Beacon Point data center campus in Texas — a 15-year base commitment valued at $19.6 billion with renewal options extending the total over 30 years.reuters+2

Circular Financing Concerns Mount

The accumulating deals have revived scrutiny from Goldman Sachs The Goldman Sachs Group, Inc. ↘ 5.09% and investor Michael Burry, who have warned for months that such intertwined arrangements could distort demand signals and amplify losses if AI fails to generate commercial returns.

Nvidia's shares fell about 5% on Monday, their worst single-day decline since early June, and the company briefly ceded its position as the world's most valuable company to Apple ↘ 0.56%. The cost of protecting Nvidia's debt against default surged by the most on record.

"Nvidia guaranteeing more of OpenAI's data center debt deepens vendor financing that's already under scrutiny," said Billy Leung, an investment strategist at Global X Management. "It's as much a reminder of funding strain in the AI build-out as it is a demand signal."

Huang Pushes Back

Huang has dismissed the circular financing critique, calling it "ridiculous" in January when discussing Nvidia's investment in CoreWeave ↘ 9.63%. He argued that Nvidia's contributions represent only a fraction of the capital its partners must ultimately raise. Bloomberg Intelligence analyst Mandeep Singh offered a more cautious view: "Nvidia wants to make sure that the build-out continues at this pace. That's a big risk for Nvidia. If things take a pause, even if it's for six months, that's not going to go very well for them."