As Ed Zitron points out, none of these are actually deals, they are MOUs, Memoranda of Understanding, and will likely never happen. Just stock-juicing announcements.
Remember the Iran-US MOU? It didn’t happen either. Weasels in a sack.
I don't disagree with that sentiment, but I also would be hesitant to underestimate the amount of dumb, rich money out there that will salivate at the prospect of lending to these AI projects.
NVIDIA is still ensuring that NVIDIA is bearing a %age of the risk to get the investors to agree to the financing deal. We don't know what that actual %age is. Are GPUs really an "investable asset"? In use that have a 3-5 year lifespan. Unused, they must depreciate at some rate as newer GPUs and other technology obsolete the current GPU models.
A pyramid scheme requires bringing in new punters, whilst circular financing uses the scheme's founders to support the investors. This scheme seems to do both, so I understand why it could be considered either/or or both.
I can imagine that, as the main cost of the datacenter is the GPUs, the asset value of owning the datacenter will depend on the value of the GPUs. Can a bank take an inventory of GPUs and realize the value of that asset? Recall that after the 2008 CDO mortgage-backed crash, both the CDOs became near-worthless junk, and banks held large inventories of foreclosed houses that took a lot of effort to unload over the years. I bought my house in foreclosure at a nice markdown.
Are GPUs more like perishable goods like potatoes than mineral commodities like oil and copper?
Personally I think they’re closer to perishable goods than mineral commodities but we’ll see. The private credit funds underwriting GPU-backed loans will be looked at from the corner of my eye.
I wrote a post back in March 2026 about the securitisation of GPUs, and I named it “Collateralised Chip Obligations (CCOs)”. Now they’ve become a mainstream thing but it was months in the making. Nvidia are now a structured finance shop that happen to sell GPUs.
If anyone thinks truly that these chips are investable assets, I have 300k tons of Intel Pentium 4s I’m ready to package into a set of securities & offer you in tranches at attractive prices! Great return, I guar-an-tee! ¯\_(ツ)_/¯
With more $T spent, there aren't any returns; hence this is "that fund" to show as returns. The new fuel to the existing circular financing.
Let's say the chips have no depreciation, no EOL, only "an investable asset- zero liabilities," and they get upgraded for free, yet what are major applications for the needed big payoff?
It is becoming like massive centralized ovens to host/sell closed proprietary models, open-weight models like cakes and tokens for $1 to 50 per barrel.
I can't wait to hear what Ed Zitron thinks of this new round of financial shenanigans!
Apparently Jensen doesn't pay attention to the Iran war any more than anyone else does.
The Iran war oil shock will absolutely sink the US economy (or at least the Stock Market) and that will sink the AI Bubble which in turn will sink the Data Center Bubble.
People apparently aren't aware that Iran just said the Strait will NOT reopen until the US has done the following:
1) Remove the US blockade.
2) Remove all sanctions on Iran.
3) Pay reparations for the damage caused so far - they're looking at $300 billion.
4) Return all frozen Iranian assets in other countries - that's another $100 billion.
5) Remove all US military assets in the region.
6) Stop making threats and insults to Iran
7) Cease all attacks on EVERYONE in the "Axis of Resistance" - which includes Iran, Ansarallah in Yemen, Hezbollah in Lebanon, the Iraqi militias, AND the Palestinians in Gaza (like Israel is going to agree to that EVER).
And in fact, Iran is saying they will not even NEGOTIATE until those things are done, let alone open the Strait. They have determined that Trump can not be negotiated with, because he's a mentally deficient moron.
And on top of that, no US or Israeli ships will ever be allowed in the Persian Gulf forevermore, according to a bill before Iran's Parliament.
Since there is ZERO chance that anyone in the Trump administration will agree to ANY of this, the Strait will not be open this year and probably not next year.
Professor Robert Pape, the expert in conflict escalation, is estimating that this war may not be resolved before 2028. I expect he's being optimistic.
There is next to zero chance that the US military can open the Strait. Most military analysts have concluded there is no military option short of 1) nuclear weapons, or 2) a million-man ground invasion (hint: the US doesn't have a million men).
What Professor Pape (and I) expect Trump to do is conduct a few more air campaigns - which will fail - and perhaps some limited ground incursions - which will fail.
What then? Stalemate for an indefinite period - while the world economy grinds down.
See https://www.zerohedge.com/markets/nvidia-set-reveal-record-500-billion-balance-sheet-spv-deal-fund-worlds-biggest-circle-jerk including but not just “The "partnership" as the FT calls it as it sounds a bit better than "hail-ma[r]y, off-balance sheet arrangement" underscores Nvidia’s increasingly desperate efforts to raise capital for itself and its clients (because everyone now admits that circular financing is absolutely critical to keeping the AI bubble going) to continue assembling the chips, power production and data centers at the heart of the AI boom.”
The current evidence supports a more precise description —> Nvidia is using limited credit enhancement to bootstrap an independently financed market for Nvidia?compute.
@Gary Marcus What would you do differently if you were in Jensen’s seat?
NVIDIA is still ensuring that NVIDIA is bearing a %age of the risk to get the investors to agree to the financing deal. We don't know what that actual %age is. Are GPUs really an "investable asset"? In use that have a 3-5 year lifespan. Unused they must depreciate at some rate as newer GPUs and other technology obsoletes the current GPU models.
So we should watch this then --> whether A100 would become the standard for lifespan GPU utility like 6+ years for all new GPU versions, or would it become obsolete quicker?
Nvidia needs to push the frontier to keep driving demand. Releasing models directly is the most effective way to apply that pressure. Since open-weight models are already undercutting closed frontier providers, direct participation benefits Nvidia while keeping developers tightly locked into CUDA.
The circularity is real, but if we criticise it, the problem becomes what replaces it. No public treasury is going to carry a decade of frontier compute buildout on its own balance sheet. The capital comes from three places: hyperscaler cash flow, sovereign funds, and vendor financing. If we remove the third, the buildout slows down. It does not get safer.
Vendor financing has funded almost every capital-heavy general purpose technology, from railroad equipment trusts to the late-90s telecom boom. It ends badly when it bankrolls demand that never materializes, but it works when it bridges a timing gap to demand that does. The puzzle is whether the end buyer of compute arrives fast enough (it will arrive).
I hope we won't have to wait until 2031 for the bubble to burst—and NO TAXPAYER BAILOUTS for these deluded investors. Who exactly are these new investors?
AI-linked stocks account for a record 45% of the S&P 500's total market capitalization and drive nearly all of the gains it's had for the year so far.
Note that's the S&P, the general market.
These companies make up an even higher percentage -- nearly 70% -- of the NASDAQ 100's market cap.
Regarding whether the financial markets are in an AI bubble or not, I've received an abnormally high number of requests recently from you, the audience, to interview Ed Zitron, host of the Better Offline podcast.
As Ed Zitron points out, none of these are actually deals, they are MOUs, Memoranda of Understanding, and will likely never happen. Just stock-juicing announcements.
Remember the Iran-US MOU? It didn’t happen either. Weasels in a sack.
I don't disagree with that sentiment, but I also would be hesitant to underestimate the amount of dumb, rich money out there that will salivate at the prospect of lending to these AI projects.
This is going to be bad, isn't it?
Why call it circular financing? It's an old fashioned Pyramid Scheme. Illegal most places.
NVIDIA is still ensuring that NVIDIA is bearing a %age of the risk to get the investors to agree to the financing deal. We don't know what that actual %age is. Are GPUs really an "investable asset"? In use that have a 3-5 year lifespan. Unused, they must depreciate at some rate as newer GPUs and other technology obsolete the current GPU models.
A pyramid scheme requires bringing in new punters, whilst circular financing uses the scheme's founders to support the investors. This scheme seems to do both, so I understand why it could be considered either/or or both.
To answer your question - are GPUs really an investable asset? Well they’re called GPU asset-backed securities so make of that what you will
I can imagine that, as the main cost of the datacenter is the GPUs, the asset value of owning the datacenter will depend on the value of the GPUs. Can a bank take an inventory of GPUs and realize the value of that asset? Recall that after the 2008 CDO mortgage-backed crash, both the CDOs became near-worthless junk, and banks held large inventories of foreclosed houses that took a lot of effort to unload over the years. I bought my house in foreclosure at a nice markdown.
Are GPUs more like perishable goods like potatoes than mineral commodities like oil and copper?
Personally I think they’re closer to perishable goods than mineral commodities but we’ll see. The private credit funds underwriting GPU-backed loans will be looked at from the corner of my eye.
I wrote a post back in March 2026 about the securitisation of GPUs, and I named it “Collateralised Chip Obligations (CCOs)”. Now they’ve become a mainstream thing but it was months in the making. Nvidia are now a structured finance shop that happen to sell GPUs.
If anyone thinks truly that these chips are investable assets, I have 300k tons of Intel Pentium 4s I’m ready to package into a set of securities & offer you in tranches at attractive prices! Great return, I guar-an-tee! ¯\_(ツ)_/¯
More like Boomerang Financing.
You throw it out and it goes around and hits you in the back of the head.
Hits us ALL in the back of the head.
This appears to be :
With more $T spent, there aren't any returns; hence this is "that fund" to show as returns. The new fuel to the existing circular financing.
Let's say the chips have no depreciation, no EOL, only "an investable asset- zero liabilities," and they get upgraded for free, yet what are major applications for the needed big payoff?
It is becoming like massive centralized ovens to host/sell closed proprietary models, open-weight models like cakes and tokens for $1 to 50 per barrel.
The trust in "The Bitter Lesson" and NNs
I can't wait to hear what Ed Zitron thinks of this new round of financial shenanigans!
Apparently Jensen doesn't pay attention to the Iran war any more than anyone else does.
The Iran war oil shock will absolutely sink the US economy (or at least the Stock Market) and that will sink the AI Bubble which in turn will sink the Data Center Bubble.
People apparently aren't aware that Iran just said the Strait will NOT reopen until the US has done the following:
1) Remove the US blockade.
2) Remove all sanctions on Iran.
3) Pay reparations for the damage caused so far - they're looking at $300 billion.
4) Return all frozen Iranian assets in other countries - that's another $100 billion.
5) Remove all US military assets in the region.
6) Stop making threats and insults to Iran
7) Cease all attacks on EVERYONE in the "Axis of Resistance" - which includes Iran, Ansarallah in Yemen, Hezbollah in Lebanon, the Iraqi militias, AND the Palestinians in Gaza (like Israel is going to agree to that EVER).
And in fact, Iran is saying they will not even NEGOTIATE until those things are done, let alone open the Strait. They have determined that Trump can not be negotiated with, because he's a mentally deficient moron.
And on top of that, no US or Israeli ships will ever be allowed in the Persian Gulf forevermore, according to a bill before Iran's Parliament.
Since there is ZERO chance that anyone in the Trump administration will agree to ANY of this, the Strait will not be open this year and probably not next year.
Professor Robert Pape, the expert in conflict escalation, is estimating that this war may not be resolved before 2028. I expect he's being optimistic.
There is next to zero chance that the US military can open the Strait. Most military analysts have concluded there is no military option short of 1) nuclear weapons, or 2) a million-man ground invasion (hint: the US doesn't have a million men).
What Professor Pape (and I) expect Trump to do is conduct a few more air campaigns - which will fail - and perhaps some limited ground incursions - which will fail.
What then? Stalemate for an indefinite period - while the world economy grinds down.
Good luck with your financing, Jensen!
@Ben you might want to follow Gary Marcus
Smart AND useful post. Always lucid.
Circular firing squad
If it is outside money from institutional investors how is it circular?
See https://www.zerohedge.com/markets/nvidia-set-reveal-record-500-billion-balance-sheet-spv-deal-fund-worlds-biggest-circle-jerk including but not just “The "partnership" as the FT calls it as it sounds a bit better than "hail-ma[r]y, off-balance sheet arrangement" underscores Nvidia’s increasingly desperate efforts to raise capital for itself and its clients (because everyone now admits that circular financing is absolutely critical to keeping the AI bubble going) to continue assembling the chips, power production and data centers at the heart of the AI boom.”
The current evidence supports a more precise description —> Nvidia is using limited credit enhancement to bootstrap an independently financed market for Nvidia?compute.
@Gary Marcus What would you do differently if you were in Jensen’s seat?
NVIDIA is still ensuring that NVIDIA is bearing a %age of the risk to get the investors to agree to the financing deal. We don't know what that actual %age is. Are GPUs really an "investable asset"? In use that have a 3-5 year lifespan. Unused they must depreciate at some rate as newer GPUs and other technology obsoletes the current GPU models.
So we should watch this then --> whether A100 would become the standard for lifespan GPU utility like 6+ years for all new GPU versions, or would it become obsolete quicker?
"If" 🤔
Nemotron absolutely WILL undercut Nvidia's partners. That's on purpose.
It's corps buying their own stock.
I don't understand the logic of this. Please enlighten me!
Nvidia needs to push the frontier to keep driving demand. Releasing models directly is the most effective way to apply that pressure. Since open-weight models are already undercutting closed frontier providers, direct participation benefits Nvidia while keeping developers tightly locked into CUDA.
The circularity is real, but if we criticise it, the problem becomes what replaces it. No public treasury is going to carry a decade of frontier compute buildout on its own balance sheet. The capital comes from three places: hyperscaler cash flow, sovereign funds, and vendor financing. If we remove the third, the buildout slows down. It does not get safer.
Vendor financing has funded almost every capital-heavy general purpose technology, from railroad equipment trusts to the late-90s telecom boom. It ends badly when it bankrolls demand that never materializes, but it works when it bridges a timing gap to demand that does. The puzzle is whether the end buyer of compute arrives fast enough (it will arrive).
An a100 GPU costing $8000 and renting at $1.35/hr can yield close to 15X the initial cost over 10 years if rates stay constant…
Yet current GPU utilization is near 5% so currently we expect 0.75X returns over 10 years.
Who at these banks did what math to come to a different conclusion from my estimate that these asset classes are expected to lose 25% over 10 years?
This is entirely a bet on GPU utilization and rental rates
I’m still trying to separate real demand from financing-driven demand here. If the money gets tighter, how many of these projects still happen?
I hope we won't have to wait until 2031 for the bubble to burst—and NO TAXPAYER BAILOUTS for these deluded investors. Who exactly are these new investors?
And latest Ed Zitron on Adam Taggart's YouTube...
From the description:
AI-linked stocks account for a record 45% of the S&P 500's total market capitalization and drive nearly all of the gains it's had for the year so far.
Note that's the S&P, the general market.
These companies make up an even higher percentage -- nearly 70% -- of the NASDAQ 100's market cap.
Regarding whether the financial markets are in an AI bubble or not, I've received an abnormally high number of requests recently from you, the audience, to interview Ed Zitron, host of the Better Offline podcast.
Well, today, your wish comes true.
Is A.I. A Massive Lie? | Ed Zitron
https://www.youtube.com/watch?v=4xztOygLnNk