The Nvidia AI bubble question is back. Nvidia’s US$3 billion (RM12 billion) investment in Meta’s share sale, announced Tuesday, is the latest addition to a portfolio of stakes, loans and guarantees. Some Wall Street doubters ask whether the chip giant is helping to inflate AI spending.
That demand made Nvidia the world’s most valuable company by market capitalisation, and turned chief executive Jensen Huang into AI’s kingmaker.
What Is Nvidia Investing In Beyond Chips?
Nvidia has taken stakes in OpenAI, Anthropic and Elon Musk’s xAI, now part of SpaceX. It also invested in neocloud companies CoreWeave and Nebius, which rent out computing power built on Nvidia chips.
Its bets extend beyond the United States. In Europe, Nvidia backed French AI developer Mistral and British self-driving startup Wayve. In Asia, it teamed up with South Korea’s SK Group to build data centres.
How Big Are Nvidia’s Financial Backstops?
Beyond equity, Nvidia acts as a customer of last resort. For CoreWeave, it committed to buy up to US$6.3 billion of unused computing capacity if no other customer takes it.
US media reports put Nvidia’s cloud backstops at around US$36 billion. It also has a guarantee of up to US$105 billion linked to an OpenAI data centre.
Is the Nvidia AI Bubble Fuelled by Circular Financing?
Critics compare the deals to the dot-com era, when companies inflated growth by investing in startups that then bought their products. Paulo Carvão, a senior fellow at the Harvard Kennedy School, warns that “the closer these relationships are, the harder it is for one to assess true sustainable demand.”
Gil Luria, head of technology research at D.A. Davidson, says not all demand is equal. Nvidia funding CoreWeave to buy Nvidia chips is “not as good as” Microsoft buying them for an OpenAI customer willing to pay for the output.
Jensen Huang argues frontier AI labs are the first generation of startups that need tens of billions of dollars to start, not just millions.
Why Did Neocloud Shares Fall 30% in October?
Shares of CoreWeave, Nebius and IREN fell at least 30% in October on worries about tighter credit for AI projects. Carvão warns that if a weaker company such as CoreWeave runs into trouble, the web of overlapping investments could spread contagion.
How Concentrated Is Nvidia’s Revenue?
- Customer 1: 22% of Nvidia’s FY2026 revenue
- Customer 2: 14% of Nvidia’s FY2026 revenue
- Source: Nvidia’s annual report, as cited by AFP
Carvão warns that if AI demand disappoints, spending cuts could hit chipmakers, data-centre builders and their financiers at once.
What Do Demand Forecasts Mean for Bursa Investors?
Carvão expects demand to keep growing for another 12 to 18 months before levelling off. Michael Cusumano of MIT Sloan expects high demand for Nvidia chips to last three to five years.
The story names no Bursa-listed company. The only Asian partner named is SK Group, a South Korean group. Worth monitoring: the gap between a 12 to 18 month window and a three to five year window, and credit conditions for neocloud firms. For a framework on screening AI names, see AI Stock Analysis for Malaysians.
Key Takeaways
- Nvidia’s US$3 billion (RM12 billion) Meta stake adds to a broad portfolio of equity, loans and guarantees.
- Nvidia’s backstops include up to US$6.3 billion for CoreWeave and a guarantee of up to US$105 billion linked to an OpenAI data centre.
- Two direct customers made up 22% and 14% of FY2026 revenue.
- Neocloud shares including CoreWeave, Nebius and IREN fell at least 30% in October.
- Forecasts range from 12 to 18 months (Carvão) to three to five years (Cusumano) for chip demand.
Frequently Asked Questions
How much is Nvidia’s Meta investment in ringgit?
Nvidia’s investment in Meta’s share sale is US$3 billion, or RM12 billion, announced on Tuesday. It is the latest addition to Nvidia’s portfolio of stakes, loans and guarantees.
What is the Nvidia AI bubble debate?
Critics ask whether Nvidia’s investments in customers such as CoreWeave help inflate demand for its own chips. Critics compare the deals to the dot-com era, when companies invested in startups that then bought their products.
How much of Nvidia’s revenue comes from its top two customers?
Two direct customers accounted for 22% and 14% of Nvidia’s revenue in its 2026 fiscal year, according to the company’s annual report. That concentration is the main risk flagged by critics.
Why did CoreWeave and Nebius shares fall in October?
Shares of CoreWeave, Nebius and IREN fell at least 30% in October amid worries about tighter credit for AI projects. Those are neocloud companies that rent out Nvidia-chip computing power.
How long will demand for Nvidia chips last?
Paulo Carvão expects demand to keep growing for another 12 to 18 months before levelling off. Michael Cusumano expects high demand to continue for three to five years.
This article is for education only and is not financial advice. Always do your own research before making any investment decision.
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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.
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