Nvidia's Chip Sales Slump Amid AI Financing Risks
Nvidia's shares have been steadily declining despite record demand for its chips and a sold-out order book through 2026. The stock closed at 174.36 euros on Friday, 14% below its May high of 202.50 euros.
The disconnect between Nvidia's strong fundamentals and its lagging stock price has left investors uneasy, particularly in light of the company's growing role as a financier for AI startups like OpenAI.
Nvidia is reportedly considering a massive credit guarantee tied to an OpenAI data-center lease in Ohio, which would mark a significant departure from its traditional role as a hardware supplier.
The move has sparked concerns about 'circular financing,' where Nvidia invests in companies that then buy its chips, potentially creating a debt bubble. The Bank for International Settlements has warned of the risks of AI-driven spending built on high leverage and opaque valuations.
Nvidia's CEO Jensen Huang argues that this strategy will help lock in revenue opportunities from its Blackwell and Rubin architectures, but analysts are skeptical about the company's ability to deliver on its trillion-dollar promises.