In case you don’t know QtR, they have become a darling child of the DoD/DoW. The latest trick, that all the cool kids are doing, is using Nvidia “compute processors” along side Flight Management Units (FMU) which allow inexpensive drones AI targeting and swarming capabilities.
Like Microsoft or Boeing, that is likely to make them another one of those “too loved by government to be allowed to fail” companies.
This reminds me of First Plus, a company that made TONS of money doing 125% LTV home loans in the late 90s. One day, with no warning, the fire alarm was tripped. When all the employees exited the building the doors were locked and the company closed and went BK. Their size and scale essentially propped up the entire segment. Within a week what you could sell for 105bp was going for 75 and in a month the industry was no more. Thousands of people jobless in the blink of an eye. Interesting parallels to what is happening here.
Sounds like the magic subprime money machine Carvana to me, which somehow is outperforming wildly while the rest of the sub 550-FICO dogshit auto industry implodes.
WeWork: Neumann reportedly said his plan was to grow so fast so quickly that he became too big to fail... Everything Chris is writing about with NVIDIA sounds a lot like a TBTF business plan.
WeWork sold vibes, kombucha, and marginless subleases. NVIDIA sells compute power that nobody else can replicate right now to governments and trillion-dollar companies. NVIDIA has tech dominance in their space. Not a valid comparison
The fire alarm story sounds apocryphal. Thousands of people locked out in one day after an alarm? That would have required a massive building. And what, half the employees left their car keys at their desks? Also, FirstPlus was a public company. Its decline wasn’t an overnight collapse. It was more gradual, tied to rising defaults on 125% LTV second mortgages and a breakdown in the securitization market. https://www.latimes.com/archives/la-xpm-1998-oct-16-fi-33194-story.html
I think you’re right, that this is a bubble. I think the fact that nvidia actually makes a physical product helps obscure the level of hype and financial engineering but it’s still a bubble. Cisco made real products too but that didn’t save their stock price.
This move by Nvidia makes sense to me. Nvidia has lots of cash, and compared to its massive market cap of $4.3 trillion, total debt at $10.5 billion seems more than manageable. Moreover, Nvidia's debt has decreased every year since 2022. By leasing instead of selling a depreciating asset they will enjoy certain accounting benefits as income from leasing will be offset by depreciation. It is a way to keep customers who otherwise couldn't afford to purchase product. Nonetheless, I like the way you are thinking Chris. One of these days you will get it absolutely right!
Well, wait a minute... Market cap of 4.3T of what? How much of that is actual demand-driven value measured in USD and how much of it a mirage of recklessly printed money? The $10.5B debt load only looks "manageable" against a mirage. Because so much of the market cap is a mirage, there is no real way to *know* what the real debt load is.
After the run NVDA has had, it's prudent to be skeptical. But if I were a betting man, my guess is that the stock price will grow by 50% before it shrinks by 50%.
Megacaps not as companies but as sovereigns or Hegemonies if you’ve read “Hyperion.” Their business models start to make a lot more sense.
In the case of NVDIA this allows them to get Blackwells and below to smaller, more specialized companies faster and at lower cost, while the hyperscalers are unaffected in their race to first to market (with AGI/ASI/AIP, etc). This is also a direct solution to the distillation “problem” first made evident with CCP Deepcheat.
Furthermore, capex isn’t going down for this stuff, it’s rapidly increasing. This is going to get way crazier once quantum enters the picture with real world use cases (we are closer than you think).
People keep talking about AI bubbles and I keep shaking my head thinking we haven’t even seen the surface of what AI can actually do at large. It will require other technologies to catch up to even begin to be classified as a bubble. Robotics, 3D printing, etc… right now though? Totally limitless and hampered only by the one thing people are somehow nervous about: compute.
The reason intel is basically being turned into USSMC is because of this very issue. It’s a matter of national security. When Taiwan is gone - and it will be gone - we will be ready with a fab and satellite fabs built and maintained in America by the best of the best. There’s no other reason to have picked up INTC. And we got it below book. This alone shows you that President Trump has got the most competent, intelligent and prophetic staff of patriots the world has ever seen.
Uranium enrichment, Boeing, etc… All on deck to rally behind the Stars and Stripes.
Farmer suicides are through the roof. Trump's policies are actually killing them.I don't know who Brazil exported to before the PRC turned to them, but our trade reps are on their asses. Bailouts don't help destroyed people.
I worked in tech for 30+ yrs, mostly software companies. Back in 2001, my employer was doing swap deals with clients, paying them say, $5M for some assets, and then closing deals with said client for $7M worth of software & services. Not 100% the same as Nvidia, but suffice to say that the senior management was removed under law enforcement supervision, and the organization’s eventual demise was facilitated. If it smells bad, it probably is.
This looks like nothing more than a price cut on the front end and a promise to pay the recycling fees on the backend. It they are lucky, they will get a follow on sale when they come to get the recycling.
Nvidia is the Enron of our time. But most investors don't know about Enron or have willfully forgotten the clear lesson. Where there's smoke, there's fire! And the first ones out the door survive with a bit of capital left intact...
"Why spread yourself in so many directions, so quickly? How is it possible to even effectuate these deals and partnerships that feel like they are coming literally every other day?"
To become too big to fail as fast as possible. TBTF is a business plan.
Agree completely, and yet here we are continually marching higher. I actually want a correction - a nice 50% haircut minimum, that will take the smile off these smug 25 - 30 year old "money managers" who think they know what the f' they're talking about. Will it ever happen? Not likely with the current administration.. Time will tell.
I’ve been saying, if every company in the world is supposedly “beating down their door”, how come they have to keep handing them all a stack of cash as they come through? It doesn’t add up.
In case you don’t know QtR, they have become a darling child of the DoD/DoW. The latest trick, that all the cool kids are doing, is using Nvidia “compute processors” along side Flight Management Units (FMU) which allow inexpensive drones AI targeting and swarming capabilities.
Like Microsoft or Boeing, that is likely to make them another one of those “too loved by government to be allowed to fail” companies.
I think you're right. And that includes not just their company - but their stock price.
All the rest of it , described here, may just be the cover.
This reminds me of First Plus, a company that made TONS of money doing 125% LTV home loans in the late 90s. One day, with no warning, the fire alarm was tripped. When all the employees exited the building the doors were locked and the company closed and went BK. Their size and scale essentially propped up the entire segment. Within a week what you could sell for 105bp was going for 75 and in a month the industry was no more. Thousands of people jobless in the blink of an eye. Interesting parallels to what is happening here.
Sounds like the magic subprime money machine Carvana to me, which somehow is outperforming wildly while the rest of the sub 550-FICO dogshit auto industry implodes.
It’s like the Led Zeppelin album “Song Remains the Same”. Pump fraudulent concept. Market to retail dipshits. Ride the wave. Pull the rug.
Carvana
WeWork
Enron
Is Nvidia next?
WeWork: Neumann reportedly said his plan was to grow so fast so quickly that he became too big to fail... Everything Chris is writing about with NVIDIA sounds a lot like a TBTF business plan.
WeWork sold vibes, kombucha, and marginless subleases. NVIDIA sells compute power that nobody else can replicate right now to governments and trillion-dollar companies. NVIDIA has tech dominance in their space. Not a valid comparison
The fire alarm story sounds apocryphal. Thousands of people locked out in one day after an alarm? That would have required a massive building. And what, half the employees left their car keys at their desks? Also, FirstPlus was a public company. Its decline wasn’t an overnight collapse. It was more gradual, tied to rising defaults on 125% LTV second mortgages and a breakdown in the securitization market. https://www.latimes.com/archives/la-xpm-1998-oct-16-fi-33194-story.html
In the 2000's, FirstPlus came back to life, acquired by the mob. https://www.housingwire.com/articles/29474-firstplus-ceo-the-mob-took-over-our-mortgage-company/
Anyway, there is no parallel to here.
I think you’re right, that this is a bubble. I think the fact that nvidia actually makes a physical product helps obscure the level of hype and financial engineering but it’s still a bubble. Cisco made real products too but that didn’t save their stock price.
Uh, Global Crossing made lots of products. WCI, not so much
This move by Nvidia makes sense to me. Nvidia has lots of cash, and compared to its massive market cap of $4.3 trillion, total debt at $10.5 billion seems more than manageable. Moreover, Nvidia's debt has decreased every year since 2022. By leasing instead of selling a depreciating asset they will enjoy certain accounting benefits as income from leasing will be offset by depreciation. It is a way to keep customers who otherwise couldn't afford to purchase product. Nonetheless, I like the way you are thinking Chris. One of these days you will get it absolutely right!
Well, wait a minute... Market cap of 4.3T of what? How much of that is actual demand-driven value measured in USD and how much of it a mirage of recklessly printed money? The $10.5B debt load only looks "manageable" against a mirage. Because so much of the market cap is a mirage, there is no real way to *know* what the real debt load is.
After the run NVDA has had, it's prudent to be skeptical. But if I were a betting man, my guess is that the stock price will grow by 50% before it shrinks by 50%.
It helps to look at these
Megacaps not as companies but as sovereigns or Hegemonies if you’ve read “Hyperion.” Their business models start to make a lot more sense.
In the case of NVDIA this allows them to get Blackwells and below to smaller, more specialized companies faster and at lower cost, while the hyperscalers are unaffected in their race to first to market (with AGI/ASI/AIP, etc). This is also a direct solution to the distillation “problem” first made evident with CCP Deepcheat.
Furthermore, capex isn’t going down for this stuff, it’s rapidly increasing. This is going to get way crazier once quantum enters the picture with real world use cases (we are closer than you think).
People keep talking about AI bubbles and I keep shaking my head thinking we haven’t even seen the surface of what AI can actually do at large. It will require other technologies to catch up to even begin to be classified as a bubble. Robotics, 3D printing, etc… right now though? Totally limitless and hampered only by the one thing people are somehow nervous about: compute.
The reason intel is basically being turned into USSMC is because of this very issue. It’s a matter of national security. When Taiwan is gone - and it will be gone - we will be ready with a fab and satellite fabs built and maintained in America by the best of the best. There’s no other reason to have picked up INTC. And we got it below book. This alone shows you that President Trump has got the most competent, intelligent and prophetic staff of patriots the world has ever seen.
Uranium enrichment, Boeing, etc… All on deck to rally behind the Stars and Stripes.
Farmer suicides are through the roof. Trump's policies are actually killing them.I don't know who Brazil exported to before the PRC turned to them, but our trade reps are on their asses. Bailouts don't help destroyed people.
I worked in tech for 30+ yrs, mostly software companies. Back in 2001, my employer was doing swap deals with clients, paying them say, $5M for some assets, and then closing deals with said client for $7M worth of software & services. Not 100% the same as Nvidia, but suffice to say that the senior management was removed under law enforcement supervision, and the organization’s eventual demise was facilitated. If it smells bad, it probably is.
Yeah usually you don't want to see "senior management was removed under law enforcement supervision" in a 10-K. But that's just me.
As I read the article, another famous name from 25 years ago came to mind, "Long Term Capital Management".
Well said, QTR. The parallels with the past are quite concerning.
This looks like nothing more than a price cut on the front end and a promise to pay the recycling fees on the backend. It they are lucky, they will get a follow on sale when they come to get the recycling.
May just be me but I find it hard to monetize an industry where the end result is basically given away. May just be me though.
Nortel was selling stuff in the future and counting the revenue in the present, pretty sure NVDA is doing some variant of that.
Mother of All Jenga Tiles works out to... MOAJT... too bad, doesn't really work, could say Mo-Jit, I guess.
You guys are late to the party! Just Dario has been all over this for many months now!
Here is his latest post, go back and read all the previous ones:
https://justdario.com/2025/09/the-last-inning-of-nvidias-great-revenue-fabrication-scheme-just-started/
Nvidia is the Enron of our time. But most investors don't know about Enron or have willfully forgotten the clear lesson. Where there's smoke, there's fire! And the first ones out the door survive with a bit of capital left intact...
"Why spread yourself in so many directions, so quickly? How is it possible to even effectuate these deals and partnerships that feel like they are coming literally every other day?"
To become too big to fail as fast as possible. TBTF is a business plan.
Agree completely, and yet here we are continually marching higher. I actually want a correction - a nice 50% haircut minimum, that will take the smile off these smug 25 - 30 year old "money managers" who think they know what the f' they're talking about. Will it ever happen? Not likely with the current administration.. Time will tell.
I’ve been saying, if every company in the world is supposedly “beating down their door”, how come they have to keep handing them all a stack of cash as they come through? It doesn’t add up.