Why Is NVIDIA (NVDA) Falling? The $250B OpenAI Deal, Circular Financing Fears, and Asian Chip Rout
TradingKey·- NVIDIA stock fell 4.99% to $196.51, losing approximately $250 billion in market value due to discussions over guaranteeing up to $250 billion in funding for an OpenAI data center project and a severe slump in Asian semiconductor stocks. - The proposed deal sparked concerns regarding circular financing and potential risks to NVIDIA's capital allocation, while record-widening credit default swap spreads reflected heightened market anxiety. - Despite these pressures and bearish technical indicators, analysts note that NVIDIA's underlying fundamentals remain strong, supported by solid second-quarter revenue guidance of $91 billion.Michael Burry Warns Nvidia's 'Overreaching' Is Pushing Circular Spending to 'Biblical Proportions' Amid Surge in Credit Default Swaps
benzinga_article·- Investor Michael Burry warns that Nvidia's strategic overreaching and circular spending have driven the company's 5 year credit default swaps up nearly 90 % year-to-date. - Critics argue that Nvidia's massive investments and data center leases in entities like OpenAI and SK Hynix represent a risky circular financing model. - Conversely, defenders maintain that these financial structures address genuine computing shortages rather than merely manufacturing artificial demand.