Key Insights
- Nvidia has been at the helm of the AI-driven market rally, but the house of cards is starting to crumble under the weight of unpaid chip bills and vibe revenue.
- Investor panic erases Nvidia’s post earnings rally.
- Why the AI bubble concerns could be deeply entrenched into the latest liquidity exodus across the markets.
Is the AI bubble on the verge of popping and will such an outcome add fuel to the fire that has been engulfing the markets lately?
Nvidia has been at the helm of the AI-driven market rally, but recent data revealed a major sales-related problem that could bring down the house of cards.
Multiple analysts previously warned that the stock market was in a bubble. However, not many have gone into details regarding this said bubble and its potential impact if it pops.
A recent post by author Shanaka Anslem Perera revealed some underlying risks around Nvidia that may be the thorn that pops the AI bubble.
Nvidia reportedly revealed roughly $33.4 billion worth of unpaid dues from its customers, which were equivalent to an 89% surge in the last 12 months.
Moreover, the tech giant’s unsold chips worth over $19 billion have been piling up. Furthermore, both Nvidia and Microsoft have been funding AI companies such as OpenAI.
The latter reportedly plans to pump $50 billion into Microsoft Cloud, while Microsoft has a $100 billion order for Nvidia chips to power the same cloud purchase from OpenAI.
Meanwhile, OpenAI received $300 million from Oracle. OpenAI also placed chip orders for Oracle data centers.
The intertwined capital flows between the companies underscored rising concerns over AI-driven liquidity.
Moreover, OpenAI has been operating with an annual loss of about $5.6 billion, hence profitability was still elusive.
These factors have no doubt triggered eye-brow raises in the investor community. To make matters worse, top investors such as Peter Thiel have recently been trimming their exposure to AI stocks.
For example, Thiel offloaded about $100 million worth of Nvidia stock on 9 November while prolific investor Michael Burry executed a short position on Nvidia.
He expects the stock to tank to around $140 by March next year. SoftBank also offloaded $5.8 billion worth of the stock just over a week ago.
Unsurprisingly, the S&P500 cooled down by roughly 4.7% from its highest point in November.
The Nvidia revenue related woes combined with observed stepback from major investors have no doubt placed more pressure on AI stocks.
More Liquidity Outflows Across the Markets?
There’s no doubt that a lot has been riding on Nvidia as the leading stock in the AI movement. The company’s Q3 earnings report came in better than expected.
Interestingly, the tech giant’s CEO noted that the whole world would have fallen apart if Nvidia missed earnings expectations.
Perhaps a nod to its dominant position in the market thanks to AI, as well as the fact that the markets have been on the edge.
Nvidia stock price initially bounced back but the positive earnings were not enough to keep the bears at bay. The stock price tanked by as much as 11% in the last 2 days.
The cash flow analysis may have triggered this decline and it underscored weakening investor sentiment.
Nvidia’s dominant position highlights the underlying risk that its stock price collapse may bring down the entire house of cards.
A massive wave of liquidity exodus may extend beyond the stock market. The crypto market for example, maintains a significant degree of correlation with the stock market.
This correlation may thus lead to more outflows from the crypto market which has been profusely bleeding liquidity this week.
Source: https://www.thecoinrepublic.com/2025/11/21/cracks-in-ai-driven-nvidia-chip-sales-raise-red-flag-triggering-selloff/
