Nvidia shares fell 5% as investors expressed concern over circular financing and heavy funding guarantees for OpenAI.
Nvidia shares fell nearly 5% on Monday, causing Apple to surpass the company as the world's most valuable public company. The decline was driven by reports that Nvidia is discussing a $250 billion financing guarantee for an OpenAI data center project in Ohio. This arrangement highlights a growing trend of circular financing, where the chipmaker acts as both a supplier and a major investor in its primary customers. Market analysts, including Jim Cramer, warned that such heavy reliance on suppliers backing their own customers could mirror the excesses of the dot-com bubble. While Nvidia remains a strong company, investors are wary of the risks if customers like OpenAI cannot eventually pay for the chips. The selloff also impacted other semiconductor stocks, including AMD and ASML, as China's progress in chipmaking equipment sparked fears of increased competition. Investors are now awaiting upcoming earnings reports from Microsoft, Amazon, and Meta to gauge future AI infrastructure spending.