Nvidia shares fell 4% on Monday after a wave of major artificial intelligence deals shifted investor attention from strong chip demand to the financial risks behind the company’s rapid expansion.
The announcements involved more than $750 billion in commitments and investments. Their scale raised fresh concerns about financing, balance-sheet exposure and the sustainability of the AI infrastructure boom.
Legendary short-seller Michael Burry reacted to the developments with a brief post on X, writing: “Around and around we go.”
Nvidia Announces Major AI Agreements
Several large-scale commitments contributed to Monday’s Nvidia stock sell-off.
SK Group Launches $500 Billion AI Partnership
Nvidia and South Korea’s SK Group announced a long-term artificial intelligence partnership valued at more than $500 billion.
The agreement includes securing HBM4 memory supply from SK Hynix. It also involves SK Telecom developing a 2-gigawatt data center powered by Nvidia’s Vera Rubin chips.
The facility is expected to begin operations in 2027.
OpenAI Financing Guarantees Raise Questions
According to The Wall Street Journal, Nvidia is discussing approximately $250 billion in financing guarantees for OpenAI.
The proposed guarantees would support a major new data center project.
Although the agreement could strengthen long-term demand for Nvidia’s chips, investors are questioning how much financial risk the company may take on to support its largest customers.
Nvidia Invests $1 Billion in Naver
Nvidia also agreed to purchase $1 billion in newly issued shares from South Korean internet company Naver.
The two companies plan to jointly develop an AI data center. Naver shares climbed by more than 10% following the announcement.
Investors Debate the Meaning of the Deals
The new agreements have intensified a major debate surrounding AI infrastructure stocks.
Some analysts view the commitments as signs of financial engineering and excessive spending. Others believe they confirm that the global AI investment cycle still has significant room to grow.
This disagreement reflects growing uncertainty about whether current AI spending will generate enough future revenue to justify the enormous upfront costs.
Bernstein Questions the Headline Numbers
Bernstein analysts took a cautious position on the SK Group announcement.
They argued that the large financial figures may mainly reflect the need for Nvidia and Broadcom to secure enough memory supply rather than representing completely new customer demand.
This interpretation is particularly positive for SK Hynix. However, Bernstein warned that the $500 billion headline may exaggerate the potential near-term revenue benefit for Nvidia.
Bank of America Remains Bullish on Nvidia
Bank of America analyst Vivek Arya maintained his Buy rating on Nvidia and kept a $350 price target.
Arya believes OpenAI will remain one of the largest consumers of AI infrastructure.
He argued that greater access to financing and electricity could extend the AI investment cycle beyond what technology companies could fund through their own balance sheets.
From this perspective, Nvidia’s financial involvement could support a longer and stronger period of data center spending.
AI Stocks Face Growing Investor Scrutiny
The cautious market reaction shows how sensitive AI stocks have become to any sign of financial weakness.
Market strategist Miskin recently noted that investors continue to welcome strong headline numbers. However, even a small concern can quickly trigger selling pressure in highly valued technology stocks.
Nvidia entered Monday’s session under pressure after losing nearly 3.9% during the previous week.
The earlier decline followed wider concerns about rising AI capital spending from major technology companies, including Alphabet and Tesla.
Nvidia Stock Remains Below Its Recent High
Following Monday’s decline, Nvidia shares traded around 15% below their 52-week high of $236.54.
Intraday trading volume reached nearly 30.7 million shares with more than five hours remaining in the session.
Nvidia’s average daily trading volume over the previous three months was approximately 155 million shares.
The elevated midday activity suggested active portfolio adjustments by institutional investors rather than a quiet, low-volume decline.
Federal Reserve Decision Could Affect Nvidia
Investors are now watching the Federal Reserve’s July 30 policy decision.
Interest-rate expectations are especially important for Nvidia because the stock trades at a premium valuation.
Higher borrowing costs can reduce the present value of future earnings and place pressure on high-growth technology shares.
Markets were reportedly pricing in roughly a one-in-three chance of an interest-rate increase.
Nvidia Earnings Will Provide the Next Major Test
Nvidia is scheduled to report its second-quarter 2027 earnings on August 26.
Wall Street expects earnings per share of approximately $2.08 on revenue of around $91.8 billion.
Analyst expectations remain strong. Over the previous 90 days, there were reportedly 33 upward earnings revisions compared with only three downward revisions.
This suggests Wall Street still expects Nvidia’s extensive AI deal pipeline to support future revenue growth.
However, Monday’s decline shows that investors want stronger evidence that these commitments will generate sustainable profits without placing excessive pressure on Nvidia’s finances.
