Nvidia's Credit Default Swaps Hit Record High as $250 Billion OpenAI Guarantee Rattles Bond Markets
Published on 07/29/2026 at 04:42 | Redaktion boerse-global.de
Taiwanese authorities arrested an Nvidia employee on July 24 on suspicion of involvement in a scheme to smuggle AI chips into China, Macau and Hong Kong using falsified business documents. The detention of a suspect named Chang, whose home and workplace were raided by prosecutors in Keelung district, expands an investigation that originally centered on Super Micro Computer but has now widened to include individual actors in the supply chain. Nvidia is not a target of the probe and insists smuggling is "out of the question," pointing to its reliance on vetted partners to comply with US export controls. Still, the case underscores how tightly Washington is now policing shipments of Blackwell and Rubin processors — and how quickly geopolitical risk can resurface for the chipmaker.
A $250 Billion Question
The arrest comes as investors grapple with a far larger concern: reports that Nvidia is negotiating a financing guarantee of up to $250 billion to back OpenAI's construction of a 10-gigawatt data center campus in Pike County, Ohio. The total cost of the project, which is being developed by SB Energy on the site of a former uranium enrichment facility, could exceed $500 billion. The first phase, delivering 800 megawatts, is slated for completion by 2028. According to the Wall Street Journal, Nvidia may also provide an additional $350 billion for chip purchases by OpenAI, on top of the $30 billion it has already invested in the company.
The scale of these commitments has sent shockwaves through credit markets. The cost of insuring Nvidia's debt against default — measured by credit default swaps — surged to an all-time high this week, with Monday alone marking the steepest single-day jump since November 2025. At the Nasdaq, Nvidia shares tumbled roughly five percent to $196.51 on Monday, wiping out an estimated $250 billion in market capitalization. In Frankfurt, the stock closed Tuesday at €173.24, up 0.21 percent on the day but still nursing a weekly decline of 6.94 percent.
Circular Financing Debate Intensifies
Critics describe the arrangement as "circular financing": Nvidia effectively provides the capital that allows its largest customer to buy more Nvidia hardware. Investor Michael Burry, market commentator Jim Chanos, and television host Jim Cramer have all voiced concerns, with Cramer drawing comparisons to the vendor financing that fueled the dot-com crash. A JPMorgan strategist characterized the current AI cycle as "too close" to the dot-com bubble for comfort. Nvidia CEO Jensen Huang has dismissed the circular financing label as "absurd" and "ridiculous."
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The International Monetary Fund and the Bank for International Settlements had previously warned about systemic risks from such financing chains in the technology sector. Those fears spilled over into Asian markets on Tuesday, where South Korea's Kospi lost more than nine percent and Japan's Nikkei fell roughly four percent, while suppliers SK Hynix, Samsung and Kioxia suffered double-digit declines.
A Web of Commitments
The OpenAI guarantee is not Nvidia's only major financial exposure. The company has signed a 15-year lease worth up to $50 billion for a data center in Texas built by Hut 8 to Nvidia's own DSX reference architecture, which will be equipped exclusively with Nvidia chips. In South Korea, Nvidia has formed a partnership with the SK Group valued at over $500 billion for data centers exceeding two gigawatts of capacity. A $1 billion investment in internet company Naver makes Nvidia its third-largest shareholder with a 4.5 percent stake, and together with asset manager Brookfield — which may contribute up to $9 billion — the partners aim to build 200 megawatts of data center capacity by 2028. Nvidia has also confirmed an equity stake in Safe Superintelligence, the startup founded by former OpenAI researcher Ilya Sutskever, which includes a long-term commitment to access the upcoming Vera Rubin platform.
Growth Versus Risk
Not all analysts view the developments negatively. Wedbush described the OpenAI guarantee as risky but ultimately positive for Nvidia over the long term. Societe Generale observed that investor focus has shifted from earnings per share to credit default swap spreads — a telling sign of how the narrative has changed.
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Fundamentally, Nvidia remains on a growth trajectory. In the first quarter of fiscal 2027, revenue surged 85 percent to $81.6 billion, with the data center segment alone contributing $75.2 billion. Earnings per share came in at $1.87. The company carries $119 billion in purchase commitments, and its four largest customers account for 61 percent of revenue — a concentration that amplifies concerns about the risks embedded in the new financing structures.
Technically, the stock sits 14.45 percent below its 52-week high of €202.50, with a relative strength index of 43.8, placing it in neutral territory after a significant recovery from its September low. For many investors, the next major catalyst will be the quarterly results due August 26, which will provide the first hard data on how export restrictions and the sprawling web of customer guarantees are affecting Nvidia's core data center business.
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