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Nvidia is one of the biggest winners of the AI boom. Its latest quarterly results showed revenues of $57 billion and profits of $31.9 billion, which are record numbers by any standard.
But instead of celebrating, the stock went wild: it rose 5% after earnings, then back down again in 18 hours. Investors, algorithms and market watchers are now asking a vital question: Is Nvidia’s growth in AI as solid as it appears on paper?
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NVIDIA’s funding model is drawing scrutiny as big investors bet against it
The first warning sign is money that has not actually been paid. Nvidia has $33.4 billion in unpaid customer bills, nearly double what it had a year ago. On average, customers take 53 days to pay, up from 46 days.
Meanwhile, the company holds $19.8 billion in unsold chips, but management says demand is very high.
“Both cannot be true… Either customers don’t buy or they buy without cash. Cash flow reveals the real story,” said Shanka Perera in a post.
Another red flag warns of the gap between earnings and real money. Nvidia reported profits of $19.3 billion, but generated cash of just $14.5 billion. This means that $4.8 billion of their “profits” did not actually appear in the bank.
By comparison, other chipmakers such as TSMC and AMD turn almost all of their profits into cash. Nvidia’s low report raises questions about how much it’s actually growing.
“Healthy companies like TSMC and AMD monetize more than 95% of profits. Nvidia monetizes only 75%. It’s a worrying level,” added Pereira.
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Things get more complicated when we look at how AI companies buy from each other. Nvidia sells chips to companies like xAI, Microsoft, OpenAI and Oracle. Many of these deals are financed with loans or credits from the same companies, which means that the same money is counted several times as income.
Michael Burry sounds the alarm on Nvidia’s revenue and demand
Michael Burry, the investor famous for predicting the 2008 crisis, refers to this “doubtful knowledge of revenue”, warning that the actual demand from end users may be very small.
Perry also noted that buying Nvidia stock may mask another risk. Since 2018, the company has spent $112.5 billion on share buybacks, while also issuing new shares.
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This effectively dilutes existing shareholders’ equity. He also questioned whether older GPUs, which consume much more electricity than newer models, are really as valuable as the company claims.
said Saying: “Just because something is used doesn’t mean it’s profitable.”
Some big investors seem to agree. According to reports, I sell Peter Thiel sold all his shares in Nvidia and SoftBank for $5.8 billion on November 11. Michael Burry bought put options, betting that Nvidia’s price will drop to $140 by March 2026.
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At the same time, speculation related to artificial intelligence seems to affect… Digital currency markets. Bitcoin has fallen about 30% since October, in part because AI startups are holding $26.8 billion in Bitcoin as collateral, which they could sell if Nvidia’s stock falls further.
Not everyone seems to be worried. Supporters argue that Nvidia has $23.8 billion in cash flow, large orders from companies like Microsoft and Meta, and that certain deals between the companies are standard in the technology industry.
However, a recent survey conducted shows Bank of America 45% of fund managers see AI as a major market bubble risk, a concern echoed by global regulators, including the International Monetary Fund and the Bank of England.
The next few months could be crucial. Analysts are monitoring Nvidia’s fourth-quarter results in February 2026, potential credit rating downgrades in March, and any restatements in April.
The company’s performance may decide whether the AI boom will continue or whether the current market panic signals the start of a broader slowdown. However, Nvidia’s story is now a test case for the age of AI-driven technology.
