Nvidia is funding an AI boom. Will it trigger a financial crash? | The Economist

Nvidia’s unprecedented financial ascent, marked by a 14-fold share price increase since the release of ChatGPT, has positioned the company as a cornerstone of the U.S. stock market, accounting for 15% of the S&P 500's recent returns. Despite facing a projected decline in market share as software giants shift toward custom silicon, Nvidia is aggressively maintaining its dominance through complex financial engineering. This includes investing $30 billion in OpenAI and guaranteeing long-term leases for massive data centers to facilitate chip sales. While Nvidia’s $100 billion cash reserve and robust free cash flow provide a significant cushion, its role as a primary financier for its own customers creates a circular ecosystem. This interdependence risks amplifying economic volatility; if AI demand fails to materialize, the simultaneous collapse of customer demand and the triggering of financial guarantees could accelerate a broader market downturn.