Nvidia's Circular Money Question: Can the AI Chip King Finance Its Own Demand Without Breaking Trust?
Published on 08/01/2026 at 13:41 | Redaktion boerse-global.de
The stock closed Friday at €174.36, a 2.98 percent rebound that did little to mask a bruising week that left the shares down 4.21 percent. For a company that has become the bellwether of the artificial intelligence boom, the whipsaw tells a story of a market caught between euphoria and unease — uneasy not about the technology, but about the financial architecture propping it up.
Nvidia's valuation now rests on a staggering pile of committed capital. Microsoft, Alphabet, Meta and Amazon have together earmarked roughly $725 billion for AI infrastructure spending in 2026, a 77 percent jump from the prior year. That torrent of hyperscaler cash is the bedrock of the bull case. Yet the market's reaction to those announcements was tellingly uneven: Microsoft drew applause for 43 percent Azure growth, while Meta saw its shares punished as investors questioned what exploding costs mean for free cash flow.
The $750 Billion Question
The more contentious issue is the deal-making happening closer to Nvidia's own balance sheet. A $750 billion package has become the flashpoint in what analysts now call "circular financing" — arrangements where money flows from Nvidia to customers who then spend it back on Nvidia products.
The structure breaks down into three parts: $500 billion for a pact with SK Group covering chips, supercomputers and a two-gigawatt data center; $250 billion in leasing guarantees for OpenAI; and reports from Ireland of negotiations over up to $350 billion in chip financing. Critics argue these constructs manufacture demand rather than reflect it. The market's skepticism was visible in late July when the stock briefly lost five percent and the company's credit default swaps widened to 82 basis points. CEO Jensen Huang dismissed the accusations as "ridiculous."
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The web extends further. Amazon has closed a $50 billion investment in OpenAI as part of a $110 billion funding round that includes $30 billion from Nvidia itself. The OpenAI data center in Ohio, being built through a SoftBank subsidiary, is slated to eventually reach ten gigawatts of capacity, with the first 800-megawatt phase targeted for 2028. Total project costs exceed $500 billion. These interlocking relationships between chipmakers, cloud providers and AI labs have fueled the bubble debate — though pockets of Silicon Valley accept potential overextension as the price of genuine innovation.
Taiwan Ascendant, China Uncertain
Beyond the financing questions, Nvidia is reshaping its production footprint. Huang has pledged to lift annual investments in Taiwan from $100 billion to $150 billion. A new Taipei campus dubbed "Constellation" is expected to house around 4,000 employees by 2030. The announcement helped push the Taiex index to a record high, with TSMC and MediaTek posting solid gains.
The geographic shift in revenue is stark. Sales in China and Hong Kong have collapsed by roughly half, while Taiwan has grown by the same magnitude. The Chinese market remains a persistent headache: Reuters reports that Washington has approved H200 chip purchases for about ten Chinese tech firms, including Alibaba, Tencent and ByteDance — yet nothing has shipped, and Chinese companies are trimming orders. Nvidia once commanded 95 percent of China's advanced chip market; that dominance has faded to a smaller slice of overall revenue.
Adding intrigue, reports suggest Moonshot AI's Kimi K3 model has accessed roughly 20,000 Nvidia chips via Alibaba Cloud. Alibaba denies using H200 models but hasn't disputed the unit count. Meanwhile, US authorities are investigating two men accused of attempting to smuggle $160 million worth of Nvidia chips to China under false labels.
The Storage Squeeze and What's Next
Nvidia is also navigating a supply-chain transition. The company has signed a $500 billion memory supply agreement with SK Hynix, while Samsung and Broadcom have inked a $200 billion letter of intent for chip production — part of a broader South Korean-American investment package approaching $950 billion.
The product roadmap is moving from Blackwell to the Vera Rubin architecture, which Huang says is already in full production with partner deliveries slated for the second half of 2026. Vera Rubin promises up to tenfold lower cost per token than Blackwell, addressing the hunger for energy-efficient "AI factories." But the ramp hasn't been seamless: reports indicate Nvidia has adjusted the memory configuration of certain Rubin racks to manage rising high-performance memory costs — memory that could otherwise account for nearly 29 percent of total material costs.
Nvidia has also taken a strategic stake in Ilya Sutskever's Safe Superintelligence, granting the startup access to the Vera Rubin platform. That move, alongside the OpenAI discussions, reinforces the circular financing narrative.
Nvidia at a turning point? This analysis reveals what investors need to know now.
A Split on the Street
Analyst opinions diverge sharply. The consensus price target sits at $304.26, but the range spans Melius Research's bullish $400 to Seaport Research's sell rating with a $180 target. Institutional behavior is equally mixed: Amova Asset Management trimmed its position while Dimensional Fund Advisors and several smaller funds added shares. Multiple insiders have also sold stock recently.
Technically, the shares are hovering just above their 100-day moving average of €173.89, with a relative strength index of 47.2 — neutral territory that offers no clear directional signal. The stock remains 13.90 percent below its 52-week high.
The next major catalyst arrives August 26, when Nvidia reports second-quarter results for fiscal 2027. Investors will scrutinize Blackwell backlog trends and Vera Rubin production yields. The analyst consensus in euro terms implies a target of €263.90, suggesting roughly 51.4 percent upside from Friday's close.
The bull case rests on a simple premise: as long as the hyperscaler giants are locked in a race for AI supremacy, demand for high-performance chips is structurally assured. The bear case is equally straightforward — when a company starts financing its own customers, the line between genuine and purchased demand blurs, and at a market capitalization of €4,010.66 billion, the stakes of getting that wrong are enormous.
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