Nvidia shares fell nearly 5% on Tuesday, extending a downward trend from Monday. The decline follows reports that Nvidia is discussing a $250 billion financing guarantee for a massive OpenAI data center.
Investors fear this arrangement represents circular financing, where a firm funds customers to purchase its own products. This news triggered a wider sell-off in AI-related stocks as the cost to insure Nvidia’s debt against default increased.
Market participants also cited concerns over the sustainability of the AI boom and increasing competition from China. These factors overshadowed a reported $5 billion investment in the startup Safe Superintelligence (SSI).