Nvidia's $250 Billion Question: Inside the Circular Financing Debate Ahead of August 26 Earnings
Published on 08/10/2026 at 03:04 | Redaktion boerse-global.de
The countdown to Nvidia's next earnings report has taken on an unusual texture. On one side sits a company whose products are being praised from orbit — literally. On the other, a growing chorus of skeptics pointing to a financing structure that some describe as a self-perpetuating loop. Both narratives converge on August 26, when the chipmaker releases fiscal second-quarter results for the period ended July 26.
The SpaceX Endorsement and Its Limits
The most recent catalyst came on August 4, when Elon Musk used SpaceX's inaugural earnings call as a publicly traded company to heap praise on Nvidia's Vera Rubin architecture, calling it "the best architecture" and "the best AI computer." Musk outlined plans to deploy the rack-scale Vera Rubin NVL72 system both in space and on the ground, with a satellite-based computing payload called Starmind AI1 slated for launch next year.
The market reaction was immediate — shares climbed past $219 in US trading, pushing Nvidia's market capitalization to roughly $5.35 trillion. But the enthusiasm cooled within days as analysts crunched the numbers. SpaceX's first-half capital expenditures totaled around $28.5 billion, or roughly $60 billion annualized — a meaningful sum, yet modest when stacked against the $100 billion to $200 billion-plus that major AI hyperscalers are pouring into data centers this year alone. The endorsement carries symbolic weight, but its financial impact on Nvidia's revenue remains marginal.
Burry's Circular Financing Warning
Far more consequential is a warning that surfaced the same day from Michael Burry, the investor famed for betting against subprime mortgages before the 2008 crisis. Burry highlighted that Nvidia appears to be backing roughly $250 billion in loans tied to OpenAI's data centers — effectively financing its own customers, who then use that capital to buy Nvidia chips.
Should investors sell immediately? Or is it worth buying Nvidia?
Burry described the arrangement as "circular spending of biblical proportions," a feedback loop where revenue and guarantees feed each other. Notably, Bernstein analyst Stacy Rasgon — whose firm rates Nvidia a buy with a $315 price target — has voiced similar concerns. When a bullishly inclined research house flags the same issue, the circularity question moves beyond bearish talking points into mainstream investor consideration.
Burry had already expanded his bearish options positions against Nvidia and Micron on August 2, and added to shorts against the SOXX semiconductor ETF. He has also argued that a single policy shift in China could cost Nvidia up to $5 billion in revenue, pointing to roughly $410 million in insider sales over the past three months as additional cause for caution.
Insider Activity Tells Its Own Story
The insider selling picture has deepened since then. SEC filings show Nvidia insiders executed 13 transactions over the past 90 days — all sales, totaling approximately $767.2 million. Board member Mark A. Stevens accounted for a significant portion, selling 885,000 shares on June 18 through affiliated trusts at weighted average prices between roughly $209 and $210.
Over the first quarter of fiscal 2026, insider sales surpassed $3.3 billion against zero insider purchases. CEO Jensen Huang retains approximately 860 million shares — about 3.5 percent of the company, currently worth more than $150 billion. Institutional activity has been mixed: SCS Capital Management trimmed its position by 8,590 shares in early August, while Antipodes Partners added 222,759 shares.
The Expansion Machine Keeps Running
Operationally, Nvidia shows no signs of slowing. Late July brought a long-term partnership with Ilya Sutskever's Safe Superintelligence, with Bloomberg reporting a $5 billion investment from Nvidia — a figure the company hasn't officially confirmed. SSI gains access to the upcoming Vera Rubin platform and expects to scale its computing capacity tenfold.
The same week saw multiple Korea-focused initiatives: collaborations with the SK Group, Naver and Brookfield, plus a joint AI research laboratory with KAIST university. The SK Group partnership alone is valued at more than $500 billion. Early August brought commitments to invest in US manufacturing, supply chains, energy grids, and workforce development to bolster domestic AI infrastructure.
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The China Overhang
Regulatory risks in China remain unresolved. The country's antitrust regulator SAMR issued a preliminary finding last September that Nvidia's 2020 acquisition of Mellanox Technologies violated Chinese competition law. Separately, US export licensing requirements for H20 chips to China, introduced in April 2025, created a $4.5 billion charge in the first quarter of the current fiscal year. Both issues remain listed as material risk factors in Nvidia's regulatory filings and are likely to surface during the earnings call.
What the Numbers Say
The stock closed Friday at €193.68, up 2.03 percent on the day and 11.23 percent over the past seven sessions — still 4.36 percent below its 52-week high of €202.50 reached in May. Wall Street consensus calls for earnings of $2.13 per share on revenue of $93.61 billion, representing roughly 96 percent year-over-year growth. Of 37 analysts covering the stock, 36 rate it a buy and one a hold, with an average price target around $309. Zacks Investment Research's automated screener recently flagged the stock as a Strong Buy growth pick.
Two parallel stories now define Nvidia's trajectory: one of relentless demand and expanding partnerships, the other of quiet warning signs — loan guarantees that prop up its own sales and insiders who sell but never buy. The August 26 report will determine which narrative gains the upper hand.
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