Nvidia Hits Record High but Fears of a Lehman-Style Collapse Grow

Nvidia (NVDA) reached an intraday market value of $5.78 trillion on Monday, setting a new record. Analyst Dan Ives believes Wall Street’s earnings estimates for the chipmaker may be 25% to 30% too low, citing strong demand. Ives, a partner at Yorkville Ives & Co., noted that Asian checks show chip demand at 13 to 14 times supply, calling Nvidia the sole chip fueling the AI revolution.

However, not everyone agrees. Michael Burry, famous for predicting the 2008 financial crisis, holds Nvidia put options through September 2027, suggesting the AI bubble could burst early. Meanwhile, Singapore’s DBS Group pointed out that Nvidia trades at 17 times forward earnings, compared to Cisco’s 100 before its crash.

The concern is whether Nvidia could face a Lehman Brothers-style collapse. Lehman’s $639 billion bankruptcy in September 2008 remains the largest one-day market loss. Nvidia invests in customers buying its chips, with $500 billion in customer financing deals announced in August. A default by these customers could impact Nvidia, similar to how funding gaps preceded past market crashes.

Asia could be hit first, as chip-led exports boosted South Korea’s output by 26.4% year-on-year in the second quarter. While Ives remains optimistic about earnings, the broader market’s exposure now depends on whether Nvidia’s customers can secure funding.