The AI frenzy is sweeping the globe in 2026, but behind the skyrocketing tech stocks emerge new risks.
Renowned investors Mark Cuban and “Big Short” investor Michael Burry warn that Nvidia, playing a pivotal role in the AI wave, is not just a chip designer, but also a financier. By investing and providing funding to help clients purchase their own designed chips and build AI data centers, Nvidia’s high-speed expansion model could become the trigger point for an AI bubble burst if AI demand cools or investment returns fall short of expectations.
Their concern is not about chip quality but Nvidia’s sales strategy.
Cuban points out that the current AI investment market’s high dependence on Nvidia is alarming. If Nvidia makes a mistake in any aspect, it could lead to a “complete collapse” of the entire investment craze with consequences that are “unimaginable.”
Burry states that Nvidia is in a state of “overexpansion,” and investors are starting to worry that this financing model could bring financial pressure. Meanwhile, some investors are willing to pay a higher cost for “Nvidia’s troubled insurance” – five-year credit default swaps (CDS), the cost of which has doubled in the past two months, reflecting investors’ increasing alertness.
Cuban and Burry believe that Nvidia’s financing support for clients to purchase graphic processing units (GPUs) equates to becoming the “backstop” behind the trades. Once AI demand cools, this model could expose Nvidia to more risks and create a phenomenon of “circular spending,” where funds flow repeatedly within the AI ecosystem to sustain or magnify chip demand.
Cuban likened this situation to the “dot-com bubble” of the 1990s when rapid internet development led to a frenzy of tech stock investment and massive influx of funds, causing valuations of startups to soar and eventually resulting in a stock market crash in March 2000.
In this tech frenzy, Cuban states that Nvidia has taken on the role played by the stock market back then, becoming the core of fund driving. “This situation is very similar to the bursting of the dot-com bubble. The difference is that in the past, companies raised funds through IPOs, but now Nvidia itself is acting like an ‘IPO,’ providing funds to everyone.”
He added, “As long as another chip supplier makes a breakthrough or if Nvidia makes a mistake, the entire situation could collapse. It’s really frightening.”
Nvidia has engaged in large-scale collaborations with key players in the AI industry, including OpenAI, Microsoft, CoreWeave, and SK Hynix, with collaboration worth billions of dollars.
Burry believes that Nvidia is pushing the “circular spending” model to “almost uncontrollable levels.”
Nvidia CEO Jensen Huang mentioned in a company meeting in November last year that Nvidia has become a crucial support in the AI industry. Many internet memes describe Nvidia as upholding the AI frenzy, the stock market, and the global economy.
On Wednesday, Nvidia’s stock price fell by about 2%, down 18% from the high point in May. However, since the beginning of 2023, Nvidia’s stock price has still risen approximately 13 times.
Nvidia has not responded to the statements made by Cuban and Burry.
This article referenced reports from “Business Insider” and financial investment website Briefs Finance.