Nvidia's Orbital Ambitions Meet a $250 Billion Question: Who's Really Paying for the AI Boom?

Nvidia's stock surges on SpaceX deal, but $540B in self-financed customer deals sparks circular spending concerns among analysts.

When Elon Musk told investors on August 4 that SpaceX would build exclusively on Nvidia's Vera Rubin architecture, the market response was immediate and emphatic. The chipmaker's shares vaulted past $219 in US trading, pushing its market capitalization to roughly $5.35 trillion. Musk's endorsement — delivered during SpaceX's first public earnings call as a listed company — carried particular weight given his plans to deploy Nvidia's Vera Rubin GPUs and Vera CPUs not just in terrestrial data centers but aboard the Starmind satellite computing unit slated for launch next year.

Yet for all the orbital enthusiasm, a more terrestrial concern is gnawing at analysts and investors alike: how much of Nvidia's seemingly insatiable demand is being financed by Nvidia itself?

The Circular Financing Debate

Four days after Musk's cosmic endorsement, "The Big Short" investor Michael Burry spotlighted a mechanism that complicates the celebratory narrative. According to a Wall Street Journal report, Nvidia is negotiating a roughly $250 billion guarantee backing OpenAI's debt, tied to a data center project in Ohio. A separate financing arrangement worth $350 billion for chip purchases is reportedly also in play. Burry's characterization was blunt — he described "circular spending of biblical proportions," a loop where Nvidia underwrites the very customers who then buy its hardware.

The concern isn't confined to bearish corners. Bernstein's Stacy Rasgon, whose firm rates the stock a buy with a $315 price target, has voiced similar reservations. When an optimistically inclined analyst flags the same structural issue, it signals the debate has moved beyond fringe skepticism. Burry had already expanded his bearish options positions against Nvidia and Micron on August 2, positioning himself ahead of what many see as a pivotal earnings moment.

The pattern extends beyond OpenAI. Bloomberg reported that Nvidia invested $5 billion in Ilya Sutskever's Safe Superintelligence startup, with the deal reportedly including access to the Vera Rubin platform — a transaction Bloomberg described as one of the largest financing moves of the entire AI boom. Tally the various arrangements and Nvidia-linked financing structures for the current year alone exceed $540 billion, before accounting for any potential new OpenAI deal.

A Familiar Market Reaction

This isn't the first time the circular financing question has rattled the stock. Late July saw a roughly 5 percent slide to $196.51 after reports of these financing structures emerged — a single session that erased around $250 billion in market capitalization and briefly returned the title of world's most valuable company to Apple.

The recent rally has recouped those losses. In US trading Thursday, the stock climbed more than 3.5 percent above the $219 threshold. German-listed shares have followed suit, advancing 11.23 percent over seven days, with Friday's close of €193.68 sitting just 4.36 percent below the 52-week high. On Friday alone, the stock gained 2.03 percent.

Melius analyst Ben Reitzes calculated Wednesday what a preliminary target of 20 gigawatts of data center capacity by end-2027 might mean for Nvidia. His $400 price target dates from May, however — a reminder of how dramatically the story has evolved since.

The Infrastructure Playbook

Set against the financing questions, Nvidia's operational expansion continues at breakneck pace. The company has announced a $500 billion partnership with South Korea's SK Group covering AI factories and next-generation memory chips, alongside infrastructure projects with NAVER and Brookfield and a joint research laboratory with KAIST. Each announcement reads individually as evidence of growth; collectively, they paint a picture of a company that no longer simply sells chips but increasingly sits at the financing levers of its own supply chain.

The SpaceX relationship, while symbolically potent, carries modest financial weight. SpaceX spent roughly $28.5 billion on investments in the first half of the year — an annualized pace of nearly $60 billion — compared with the $100 billion to $200 billion-plus that major AI hyperscalers are pouring into data centers this year alone. Musk's endorsement may move markets, but its revenue implications for Nvidia remain comparatively contained.

Insider Activity Tells a Different Story

Ownership data reveals a more cautious undercurrent. Director Mark A. Stevens sold 885,000 shares through affiliated trusts on June 18 at a weighted average price of roughly $209 to $210. Over the first quarter of fiscal 2026, insider sales totaled more than $3.3 billion — against zero insider purchases during the same period. CEO Jensen Huang continues to hold approximately 860 million shares, about 3.5 percent of the company, currently worth more than $150 billion, though his ongoing 10b5-1 selling plans have steadily reduced his stake over time.

Institutional moves have been mixed. SCS Capital Management trimmed its position by 8,590 shares, while Antipodes Partners added 222,759 shares.

The August 26 Verdict

All eyes now turn to August 26, when Nvidia reports second-quarter results for fiscal 2027, covering the period that ended July 26. Consensus estimates call for earnings of $2.13 per share on revenue of $93.61 billion. Analysts project 96 percent growth for the quarter, with the third quarter expected to deliver 81 percent. Of 37 analyst houses polled Tuesday, 36 rated the stock 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.

The tension is hard to miss: a stock trading near record highs on the strength of cosmic endorsements and staggering growth projections, shadowed by questions about whether the demand fueling that growth is as self-sustaining as it appears. Between orbital data centers and billion-dollar credit guarantees for customers lies a story that has outgrown its origins as a simple chip narrative — and the August 26 earnings report will test which version of that story investors ultimately believe.