Nvidia's Circular Logic: A $5 Billion Bet That Cuts Both Ways
Published on 08/08/2026 at 19:41 | Redaktion boerse-global.de
The paradox at the heart of Nvidia's current market position is almost too neat to be coincidence. The company that supplies the picks and shovels for the artificial intelligence gold rush is now writing checks to its own future customers — and critics are asking whether the resulting demand is as solid as it appears.
Nowhere is that tension more visible than in the July 27 announcement that Nvidia would invest in Safe Superintelligence Inc., the startup founded by former OpenAI chief scientist Ilya Sutskever. Bloomberg, citing sources familiar with the matter, pegged the investment at roughly $5 billion. Neither party disclosed official financial terms, but the strategic logic is clear: SSI gets access to Nvidia's upcoming Vera Rubin platform, which the startup says will expand its computing capacity by an order of magnitude. And SSI, in turn, becomes a chip customer — likely a very large one.
That arrangement has drawn sharp scrutiny from a familiar corner. Michael Burry's Scion Asset Management has been building its short position against Nvidia, adding bets against Micron and Caterpillar along the way. Burry's thesis: a substantial portion of Nvidia's current and future demand isn't coming from end users but is being propped up by off-balance-sheet financing structures — a circular model where future revenue rests on deals that ultimately route capital back into Nvidia's own products. Late last month, Burry publicly noted that five-year credit default swaps on Nvidia bonds were moving "parabolically," coinciding with reports that the company had signed data center lease agreements worth up to $50 billion in Texas to support its "neocloud" partners. Bernstein's Stacy Rasgon flagged the same pattern in early August.
The concern is legitimate, but it isn't the whole story. Buying growth through circular financing shifts risk into the future — a familiar dynamic in every tech boom. What's different this time is the breadth of Nvidia's partnerships, which extend well beyond any single deal.
Should investors sell immediately? Or is it worth buying Nvidia?
Over recent weeks, the company has assembled a web of alliances: an expanded strategic cooperation with South Korea's SK Group covering AI factories and memory technology, a joint project with NAVER and Brookfield to build out Korea's national AI infrastructure, a research laboratory with KAIST, and a national AI infrastructure program backed by Japan's government and industry. That roster of state-anchored and industrially grounded projects makes it difficult to dismiss the entire demand picture as a financing carousel.
The Week That Was
Whatever the structural debates, the market has been voting with its feet. Over seven trading days, Nvidia shares climbed 11.23 percent — reportedly the largest weekly gain in company history, adding roughly $562 billion in market capitalization. The stock closed Friday at €193.68, up 2.03 percent on the day, leaving it just 4.36 percent below its May record high. The company's market value now stands at €4,588.78 billion.
The catalyst for this particular rally had a name: Elon Musk. SpaceX announced it would exclusively adopt Nvidia's Vera Rubin architecture for data centers both on Earth and in orbit — a commitment embodied in the "Starmind AI1" project, a satellite constellation designed to process AI workloads in space. For a company whose largest customers have spent years developing in-house chips to reduce their dependence on Nvidia, SpaceX's exclusivity sends a different signal: at the most demanding end of the computing spectrum, Nvidia's architecture remains without serious competition.
The hyperscalers are reinforcing that message with capital. Alphabet plans 2026 capital expenditures between $195 billion and $205 billion; Amazon is targeting $220 billion. Much of that spending flows into precisely the kind of infrastructure Nvidia supplies.
Nvidia also demonstrated it isn't resting on hardware alone. On August 4, the company launched "Alpamayo 2 Super," a model developed for robotaxis that reportedly outperformed both Google's Gemini 2.5 Pro and GPT-4o in key benchmarks. That vertical integration — chips and models from a single source — underpins the analyst consensus price target of €261.99, implying upside of 35.3 percent from Friday's close.
Nvidia at a turning point? This analysis reveals what investors need to know now.
Cracks in the Facade
The risks remain visible, even if the market is currently choosing to look past them. A severe shortage of High Bandwidth Memory could force Nvidia to reduce the HBM4E memory stack on its upcoming "Rubin Ultra" chip to boost production volumes and delivery speeds. Some investors read that as a margin warning; the market this week seems to accept it as a rational trade-off when customers prioritize speed over maximum specification.
China exposure adds another layer of uncertainty. Media reports suggest up to $5 billion in Chinese revenue could vanish with a single policy shift. Meanwhile, insiders sold roughly $410 million worth of shares over the past three months while the stock traded at elevated levels — a signal that warrants attention even if it doesn't warrant alarm.
The next test arrives August 26, when Nvidia reports second-quarter fiscal 2027 earnings. Consensus expectations call for revenue growth of 96 percent year over year. The market is currently pricing in the growth story rather than the circular-financing debate, and the structural arguments for Nvidia — broad, partly state-backed demand that is demonstrably real — carry weight. But the combination of circular financing, unresolved China risk, and visible insider selling should give any investor pause before treating the current strength as a self-sustaining trend. The RSI at 63.5 suggests the stock is approaching overbought territory without quite arriving. For now, the world's largest tech companies see no serious alternative to Nvidia's roadmap. The question is whether that remains true when the memory shortage persists, competitors close the gap, and the circular deals come due.
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