--- title: "Nvidia's Potential $250 Billion OpenAI Financing Deal Is Reviving a 1990s Tech Bubble Habit, Analyst Warns: 'Usually Don't End Well'" type: "News" locale: "en" url: "https://longbridge.com/en/news/294077412.md" description: "Analysts warn that Nvidia's potential $250 billion financing deal for OpenAI resembles the risky vendor financing strategy of Lucent Technologies in the 1990s, which ultimately failed. Critics describe the arrangement as 'circular financing,' where suppliers fund customers to buy their products, raising concerns about artificial demand and financial risk. While some view AI infrastructure investments as a virtuous circle, others caution that such models rely on continuous hype and funding, potentially leading to negative outcomes similar to past tech bubbles." datetime: "2026-07-28T13:27:41.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/294077412.md) - [en](https://longbridge.com/en/news/294077412.md) - [zh-HK](https://longbridge.com/zh-HK/news/294077412.md) generator: "portal-rs" --- # Nvidia's Potential $250 Billion OpenAI Financing Deal Is Reviving a 1990s Tech Bubble Habit, Analyst Warns: 'Usually Don't End Well' While the structure of **Nvidia Corp.**‘s (NASDAQ:NVDA) potential financing to help **OpenAI** lease a massive Ohio data center remains unclear, **Seaport Research** analyst **Jay Goldberg** expressed caution about such an arrangement. Goldberg warned that vendor financing can backfire, noting companies have previously hurt themselves by financing customer purchases. He pointed to **Lucent Technologies**‘ 1990s telecom financing strategy, which he said ultimately “essentially broke that company,” reported MarketWatch. “These kinds of financing usually don’t end well,” Goldberg said. He said the reported arrangement remains unclear, but if it moves forward, he believes it would be difficult to “justify” from Nvidia’s perspective. Jefferies technology strategist **Jeffrey Favuzza** said investors viewed the report as the clearest and largest example yet of potential circular financing, while noting the market is already familiar with such concerns. ## What Happened to Lucent? In the late 1990s telecom boom, Lucent aggressively used vendor financing, lending billions of dollars to telecom carriers so they could buy Lucent’s networking equipment. The strategy fueled rapid sales and network expansion during the boom, but when many telecom startups collapsed after the dot-com bubble burst, Lucent was left with massive bad debts and write-downs, making its financing model a cautionary tale about supplier-funded demand. In 2006, it merged with France’s Alcatel in a $13.4 billion deal, creating **Alcatel-Lucent**. **Read Also: Nvidia Stock Falls 5%: How Credit Risk Sharing Is Impacting the AI Trade** ## AI Financing Model Sparks Debate On Sunday, the Wall Street Journal reported that Nvidia is in talks to provide a $250 billion financing guarantee to help OpenAI secure funding for a massive AI data center in Ohio that could cost more than $500 billion. The arrangement would also include discussions to finance up to $350 billion in Nvidia chip purchases. Developed by **SoftBank Group’s** (OTC:SFTBF) (OTC:SFTBY) energy unit, the project is expected to deliver 800 megawatts of capacity in its first phase by 2028. The AI boom has fueled a growing network of cross-investments, sparking debate over whether they reflect strategic partnerships or artificially inflated demand. Critics have raised concerns about “circular financing,” where suppliers fund customers who then buy the suppliers’ products, with some warning the model relies on continuous funding, hype, and FOMO to sustain momentum. "Circular deals, like their cousin the Ponzi scheme, require constant activity in the way of new funds, continuous hype, and the stoking of FOMO," warned **Hammerstone Markets**, highlighted by **Michael Burry** on X. In contrast, **Janus Henderson** argued that these massive AI infrastructure deals create a “virtuous circle,” efficiently aligning builders, suppliers, and customers to meet soaring demand for computing power. ***Disclaimer*:** *This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors*. *Image via Shutterstock* **Read Also: Nvidia Funds AI Frenzy: Timeline of its Circular Financing Deals … So Far** ### Related Stocks - [NVDA.US](https://longbridge.com/en/quote/NVDA.US.md) - [NVDY.US](https://longbridge.com/en/quote/NVDY.US.md) - [NVDS.US](https://longbridge.com/en/quote/NVDS.US.md) - [NVDU.US](https://longbridge.com/en/quote/NVDU.US.md) - [NVDD.US](https://longbridge.com/en/quote/NVDD.US.md) - [NVD.US](https://longbridge.com/en/quote/NVD.US.md) - [NVDX.US](https://longbridge.com/en/quote/NVDX.US.md) - [NVDQ.US](https://longbridge.com/en/quote/NVDQ.US.md) - [NVDL.US](https://longbridge.com/en/quote/NVDL.US.md) - [NVDB.US](https://longbridge.com/en/quote/NVDB.US.md) - [NVDG.US](https://longbridge.com/en/quote/NVDG.US.md) - [NVDO.US](https://longbridge.com/en/quote/NVDO.US.md) - [NVDW.US](https://longbridge.com/en/quote/NVDW.US.md) - [NVYY.US](https://longbridge.com/en/quote/NVYY.US.md) - [NYYY.US](https://longbridge.com/en/quote/NYYY.US.md) - [DIPS.US](https://longbridge.com/en/quote/DIPS.US.md) - [MAGX.US](https://longbridge.com/en/quote/MAGX.US.md) - [SMH.US](https://longbridge.com/en/quote/SMH.US.md) - [SOXX.US](https://longbridge.com/en/quote/SOXX.US.md) - [SOXL.US](https://longbridge.com/en/quote/SOXL.US.md) - [SOXQ.US](https://longbridge.com/en/quote/SOXQ.US.md) - [XSD.US](https://longbridge.com/en/quote/XSD.US.md) - [PSI.US](https://longbridge.com/en/quote/PSI.US.md) - [FTXL.US](https://longbridge.com/en/quote/FTXL.US.md) - [07388.HK](https://longbridge.com/en/quote/07388.HK.md) - [07788.HK](https://longbridge.com/en/quote/07788.HK.md) - [09388.HK](https://longbridge.com/en/quote/09388.HK.md) ## Related News & Research - [Jacobson & Schmitt Advisors LLC Boosts Stake in NVIDIA Corporation $NVDA](https://longbridge.com/en/news/297290654.md) - [Michael Burry Points to Nvidia's $105B OpenAI Guarantee as 'Circular Financing' Red Flag: 'Whistling Past the Graveyard'](https://longbridge.com/en/news/297288742.md) - [Nvidia’s Biggest Customers Face a Painful New AI Bill](https://longbridge.com/en/news/297062287.md) - [Bankers are shopping Hugging Face at triple the price it gave Nvidia](https://longbridge.com/en/news/296947134.md) - [Goelzer Investment Management Inc. 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