Nvidia is among the greatest winners of the AI increase. Its newest quarterly outcomes confirmed $57 billion in income and $31.9 billion in revenue, report numbers by any measure.
However as a substitute of celebrating, the inventory swung wildly: up 5% after earnings, then down once more inside 18 hours. Traders, algorithms, and market watchers are actually asking a vital query: Is Nvidia’s AI development as strong because it seems to be on paper?
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NVIDIA’s Financing Mannequin Attracts Scrutiny as Massive-Title Traders Wager In opposition to It
The primary warning signal is cash that has not really been paid. Nvidia has $33.4 billion in unpaid buyer payments, practically double what it had a yr in the past. On common, clients are taking 53 days to pay, up from 46 days.
In the meantime, the corporate is sitting on $19.8 billion of unsold chips, but administration says demand is thru the roof.
“Each can’t be true…Both clients aren’t shopping for or they’re shopping for with out money. The money stream tells the actual story,” stated Shanaka Perera in a put up.
One other crimson flag is the hole between income and precise money. Nvidia reported $19.3 billion in revenue, but it surely generated solely $14.5 billion in money. Which means $4.8 billion of its “revenue” has not really appeared within the financial institution.
For comparability, different chipmakers like TSMC and AMD flip virtually all of their income into money. Nvidia’s decrease fee raises questions on how a lot of its development is actual.
“Wholesome chip corporations like TSMC and AMD convert over 95% of income to money. Nvidia converts 75%. That’s misery stage,” Perera added.
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Issues get much more difficult once you take a look at how AI corporations purchase from one another. Nvidia sells chips to companies like xAI, Microsoft, OpenAI, and Oracle. Many of those offers are funded by loans or credit from the identical corporations, that means the identical cash is counted a number of occasions as income.
Michael Burry Sounds the Alarm on Nvidia’s Income and Demand
Michael Burry, the investor well-known for predicting the 2008 crash, refers to this “suspicious income recognition,” warning that the precise demand from end-users could also be very small.
Burry additionally identified that Nvidia’s inventory buybacks could also be hiding one other danger. Since 2018, the corporate has spent $112.5 billion on buybacks, whereas nonetheless issuing new shares.
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That successfully dilutes current shareholders. He additionally questioned whether or not older GPUs, which use much more electrical energy than newer fashions, are actually as priceless as the corporate claims.
“Simply because one thing is getting used doesn’t imply it’s worthwhile,” he stated.
Some huge buyers appear to agree. Peter Thiel reportedly offered all of his Nvidia shares, and SoftBank offered $5.8 billion value on November 11. Michael Burry purchased put choices betting Nvidia would crash to $140 by March 2026.
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On the similar time, AI-linked hypothesis seems to be affecting crypto markets. Bitcoin has dropped practically 30% since October, partly as a result of AI startups maintain $26.8 billion in Bitcoin as collateral, which could possibly be offered if Nvidia’s inventory falls additional.
Not everyone seems to be apprehensive. Supporters argue that Nvidia has $23.8 billion in money stream, big orders from corporations like Microsoft and Meta, and that among the inter-company offers are normal within the tech business.
Nonetheless, a current survey by Financial institution of America reveals that 45% of fund managers view AI as a serious market bubble danger, a priority echoed by international regulators, together with the IMF and Financial institution of England.
The following few months could also be vital. Analysts are watching Nvidia’s fourth-quarter leads to February 2026, doable credit score downgrades in March, and any restatements in April.
How the corporate performs may determine whether or not the AI increase continues or if the current market panic alerts the beginning of a broader slowdown. Both approach, the Nvidia story is now the check case for the AI-driven tech period.