High-profile investors Mark Cuban and Michael Burry raised severe concerns on July 29, 2026, regarding Nvidia Corp.
funding its customers' artificial intelligence chip purchases, warning that the practice creates dangerous market vulnerabilities reminiscent of the dot-com bubble.
Shares of Nvidia traded down 2% on Wednesday, extending a decline that leaves the stock 18% below its peak from May.
Despite the recent drop, the company's valuation remains up roughly 13-fold since the start of 2023.
Critics point out that Nvidia has been financing the acquisition of its own graphics processing units for data center construction.
By providing backing to major AI developers, the chipmaker essentially subsidizes demand for its hardware, constructing what market observers call a circular spending loop.
Investor Warnings
Mark Cuban, tech billionaire and former investor on Shark Tank, voiced his alarm over the setup on social media platform X.
"This is so analogous to the dot com burst," said Cuban. "But instead of IPOs, Nvidia is the 'ipo,' funding everyone and anyone."
Major corporations including OpenAI, Microsoft, CoreWeave, and SK Hynix have committed hundreds of billions of dollars toward Nvidia technology.
Concerns persist that if these infrastructure investments fail to generate expected profits, Nvidia could face substantial fallout from non-paying clients.
"One breakthrough in another chip provider, or a misstep, and it all could crumble," said Cuban. "It's truly scary."
Cuban previously noted on a podcast that firms are erecting data centers that could quickly become obsolete, jokingly suggesting surplus facilities might be converted into pickleball courts.
Michael Burry, the investor noted for predicting the 2008 housing crash, echoed similar warnings regarding the credit exposure surrounding the semiconductor giant.
Burry revealed he holds sizable short put positions on Nvidia, citing total dependence on hyperscaler capital expenditure.
"There is a reason $NVDA's 5 year credit default swaps are going parabolic," said Burry. "All this overreaching by #nvda to push the circular spending to biblical proportions."
Financial metrics show the cost of five-year credit default swaps—contracts that insure against corporate debt default—has approximately doubled for Nvidia over a two-month span, signaling elevated market anxiety.
"The market has voted and the results are clear," said Burry.
Industry Perspectives
Nvidia Chief Executive Officer Jensen Huang previously addressed the central role his company plays across the technological landscape during an internal meeting in November.
"We're basically holding the planet together — and it's not untrue," said Huang.
Wall Street analysts offer differing perspectives on the structural exposure.
Wolfe Research senior analyst Chris Caso noted that while Nvidia and Broadcom Inc. are taking on long-term liabilities by backstopping financing for AI projects, Nvidia's robust cash flow provides a buffer.
"That part of it is less good, because there's some liability on there," said Caso.
"That liability is probably far in the future, but that part I'm less comfortable with."
Nvidia recently formed a partnership with SK Group for a $500 billion AI factory initiative and is reportedly in discussions to backstop nearly $250 billion to assist OpenAI in leasing data center compute capacity.
"Right now, the benefit Nvidia has is that they are generating just so much cash," said Caso.
"They have such a strong balance sheet, and probably the healthiest balance sheet in the industry."
Caso noted that Nvidia is actively attempting to eliminate capital bottlenecks that could otherwise hamper the expansion of AI deployment.
"I think what Jensen's trying to do is figure that if financing becomes a bottleneck, that constrains his business, so let's try to remove that bottleneck," said Caso.
Meanwhile, tech strategist Dan Ives expects major technology enterprises to continue accelerating capital outlays to construct AI infrastructure.
"Signs of monetization will be key as patience from tech investors [is] being tested," said Ives.
Broadcom also entered the financing arena last month, partnering on an AI XPV platform with an initial $35 billion tranche.
Nvidia did not immediately respond to requests for comment.
