According to TechSpot, Nvidia’s explosive rise to a $4 trillion valuation, making it the world’s most valuable company, is now facing intense investor scrutiny over how it finances its own customers. The company has committed to investing $10 billion annually in OpenAI for the next decade, funds largely earmarked for buying Nvidia’s own hardware. It has similar arrangements with AI cloud provider CoreWeave. These deals have drawn comparisons to risky “vendor financing” practices that contributed to the collapse of firms like Lucent Technologies in the late 1990s. Nvidia firmly rejects these parallels, stating in a leaked memo it does not rely on such arrangements to grow revenue. Beyond this, the company uses special-purpose vehicles (SPVs) for investments, including a $2 billion fund tied to Elon Musk’s xAI for chip purchases, a mechanism that has also drawn comparisons to Enron.
The Ghost of Bubbles Past
Here’s the thing: when investors start whispering names like “Lucent” and “Enron,” it’s never a good sign. Those aren’t just companies that failed; they’re symbols of entire eras of financial euphoria and subsequent catastrophe. So the fact that these comparisons are being made around the world’s most valuable company is, frankly, wild. Nvidia‘s defense is straightforward: they say this isn’t vendor financing but strategic investment to align incentives and accelerate AI deployment. And look, there’s a logic to that. If you’re the only game in town for the chips that power a technological revolution, you have a vested interest in making sure your biggest customers can actually afford to build. But it creates a dangerously circular flow of capital. It’s like a car company giving you a loan to buy its car, then counting that sale as pure, organic demand. The question is, when does the music stop?
Winners, Losers, and the AI Supply Chain
This situation creates a bizarre competitive landscape. Companies like CoreWeave, which essentially lease access to Nvidia’s chips, get a massive leg up because they’re not just customers—they’re financially backed partners. That’s a huge barrier for any would-be competitor. For other chipmakers like AMD or Intel, it’s a double-edged sword. On one hand, Nvidia’s deals are creating and funding the entire market they’re trying to enter. On the other, how do you compete with a rival who can also act as the bank? It potentially distorts the entire market’s pricing and demand signals. If you’re building an industrial AI system and need reliable, high-performance computing hardware, you’re operating in a market fundamentally shaped by these behind-the-scenes financial maneuvers. For businesses in manufacturing and heavy industry looking to integrate this tech, understanding that the supplier ecosystem might be propped up by unconventional financing is crucial.
The Solvency Question
So what’s the real risk? It’s not necessarily accounting fraud. Most analysts cited seem to think this reflects the insane economics of AI, not deliberate manipulation. The risk is simpler: solvency. Nvidia’s future now depends heavily on a handful of massively leveraged customers—OpenAI, Anthropic, CoreWeave—whose own business models are still unproven at scale. They’ve bet everything on buying Nvidia chips now to build AI services that will (they hope) generate enough revenue later to pay for it all. If the adoption of generative AI slows, or if the monetization doesn’t materialize as fast as expected, these companies could falter. Then, Nvidia isn’t just losing a customer; it’s writing down a billion-dollar equity stake and eating massive unpaid bills. It’s all tied to one big assumption: that the AI gold rush will continue at its current frantic pace indefinitely. History suggests that’s a dangerous bet.
Built on Sand or Solid Ground?
Nvidia’s CFO, Colette Kress, says there’s no bubble. The markets, for now, agree. But the structures now in place are a direct result of a “violent change in supply and demand,” as CoreWeave’s CEO put it. The company is trying to solve a chicken-and-egg problem by being both the farmer and the feed store. It’s a breathtaking display of market power and confidence. Basically, Nvidia is so convinced of its central role in the future that it’s willing to finance that future itself. The problem is, we’ve seen this movie before. The telecom boom was built on real demand, too—until it wasn’t. The ultimate test won’t be a quarterly earnings report, but whether the trillion-dollar bets made by OpenAI and others actually pay off. If they do, Nvidia looks like a visionary. If they don’t, those comparisons to Lucent and Enron will move from the financial opinion pages to the history books. For anyone relying on this technology stack, from startups to enterprises, that’s a fundamental uncertainty baked right into the foundation of the AI era.
