Nvidia on its way to a $250 billion guarantee for OpenAI - and fears of an AI bubble are escalating:
Nvidia is in negotiations with OpenAI to provide a financial guarantee of approximately $250 billion, as part of establishing one of the largest artificial intelligence infrastructure projects seen to date.
According to reports, the guarantee will allow OpenAI to lease a 10-gigawatt (GW) data center, built by SoftBank in southern Ohio.
This is enough power to operate millions of AI processors simultaneously.
The project is expected to receive power supply from the US federal government - which illustrates how much the US views AI infrastructure as a strategic asset.
But here the real event begins:
The guarantee alone is estimated at approximately $250 billion; when adding the cost of chips, AI servers, cooling systems, communications, and infrastructure, the total project cost could exceed $500 billion.
Yes, over half a trillion dollars.
If the plan materializes, it will be the largest data center ever announced, representing another leap forward in the global race to build AI infrastructure.
However, many investors are raising a familiar pattern online -
When the chip supplier helps finance the customer so that the customer buys chips from them, the question arises whether this is "real" demand or a self-inflating bubble...
This is precisely the type of financial structure that draws criticism during periods of market euphoria,
This is also why investor Michael Burry published the short comment: "Round and round we go".
Burry's message on this issue:
This involves circular financing where money, credit, and demand feed each other - a phenomenon that sometimes characterizes periods of financial bubbles.
But on the other hand, it's important to remember that the fact a company provides a guarantee or assists with financing does not in itself prove a bubble - supplier financing deals, guarantees, and complex financing structures also exist in other industries.
The real question is whether these projects will generate cash flow and profitability to justify the enormous investments - or if this is demand being brought forward at the expense of the future?
Wall Street is not content with headlines - ultimately, the market will judge based on the return on hundreds of billions of dollars invested - not on the size of the promises.
2 scenarios from here:
1. If the data centers generate economic value - this is a historic move.
2. If not - Burry's statement could become one of the most memorable predictions of the AI era - just like his prediction back in 2008 - which eventually became a grim reality on the ground.
2 scenarios are on the table.
We are monitoring.