Nvidia's Money Maze: Is AI Boom Built on Shaky Ground?

Nvidia's recent $100 billion bet on OpenAI has sparked debates. The company is investing heavily in its own customers, creating a tangled web of deals. This raises questions about whether the AI boom is truly strong or just inflated by these circular transactions. Nvidia isn't just selling chips; it's also lending money and taking stakes in companies like OpenAI and Coreweave. These companies then buy more chips from Nvidia. It's a cycle that might be skewing how much real demand there is for AI. The problem? It's hard to track where the money is really going. Nvidia's investments are often small individually but add up to a big sum. Plus, the company's deals with cloud service providers add more layers to this complex puzzle. Take Coreweave, for example. Nvidia owns a big chunk of it and has agreed to buy unsold cloud capacity. Coreweave, in turn, buys Nvidia's expensive GPUs. So, the money Nvidia invests often flows right back to it. This isn't the only example. Nvidia has similar deals with other companies, like Lambda. It's renting its own chips back from them. Critics see this as a sign of an AI bubble, where money is circulating in loops rather than reflecting real growth. Some analysts are worried. They compare this to the dot-com bubble, where companies lent money to customers to buy their products. When the bubble burst, those loans turned into bad debt. Nvidia's deals might be helping AI companies now, but they could backfire. If AI demand doesn't live up to expectations, Nvidia could be left with unsold chips and bad loans.