The market is "voting with its feet"! OpenAI was guaranteed $250 billion, and Nvidia's market value evaporated by $250 billion in response.

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Nvidia is reportedly considering providing up to $600 billion in financial support for an OpenAI data center project in Ohio, a deal that has sparked significant unease among Wall Street traders. Many believe this will mark the symbolic moment at the peak of the AI cycle financing frenzy.

Wallstreetcn mentions that on July 27, according to The Wall Street Journal, Nvidia is in talks to provide $250 billion in financial guarantees for OpenAI, and may additionally provide $350 billion in financing for OpenAI to purchase chips required for the data center.

After the news was released, market sentiment cooled noticeably. Nvidia's CDS spread soared by 14 basis points in a single day, its stock price plunged by 5%, and about $250 billion in market capitalization evaporated in one day, roughly equal to the scale of the financing guarantees under negotiation.

Meanwhile, last Friday, Nvidia announced a $50 billion long-term supply agreement with South Korean memory chip giant SK Hynix, and on Sunday expanded its collaboration with Siemens in the AI workflow domain.

Goldman Sachs chief trader John Flood pointed out that a large number of inquiries flooded the trading desk on Monday, all centering on the same question: When the outstanding financial commitments assumed by leading AI companies now exceed $1.5 trillion, where does the entire ecosystem’s repayment capacity truly come from?

This concern is compounded by the Fed’s policy meeting, the intensive tech earnings season, and rapidly rising interest rates, all amplifying market risk aversion. The current forward P/E ratio for the Nasdaq 100 index is about 21.8x, nearly 10% lower than the ten-year average of 23.6x, marking the lowest valuation level since the AI rally began in early 2023.

$600 Billion Deal Shakes Market

The scale and unique structure of this deal disclosed by The Wall Street Journal quickly became the focus of market discussion.

According to the report, Nvidia plans to provide $250 billion in financial guarantees for OpenAI’s Ohio data center project and may also provide an additional $350 billion in financing dedicated to OpenAI’s chip purchases from Nvidia—essentially, Nvidia funding OpenAI to buy Nvidia’s own products.

Goldman Sachs’ John Flood said this arrangement made many traders uncomfortable.

Although Nvidia currently has ample cash flow, the $250 billion guarantee is still enormous and will have profound effects on its financial statements. As a guarantor, Nvidia will bear significant contingent liabilities.

Moreover, around $2 trillion in revolving financing across the AI industry chain fundamentally depends on leading model companies like Anthropic and OpenAI having real repayment capacity. Once open-sourced large models continue to grab market share, this assumption faces fundamental disruption.

Currently, Goldman Sachs’ prime brokerage data shows the market position is clearly neutral, but hedge funds are gradually reducing individual stock exposure, and long-term investors generally remain on the sidelines.

AI-related capital expenditure has long been one of the core stories bolstering the market, but Flood notes that investors are now starting to reverse pressure; the credit market is the key watchpoint.

Wallstreetcn mentions that, according to ICE Data Services, Nvidia’s five-year CDS spread jumped 14 basis points in a single day to 82 basis points—the biggest intraday spike since the contract became actively traded last November.

Analysts note the AI financing chain is highly cyclical, with financial flows among chipmakers, cloud giants, and model companies deeply interconnected, and each party’s financial health highly interdependent.

When Nvidia is both supplier and financier, the self-reinforcing properties of the chain become ever more apparent—along with its vulnerabilities.

Rising Rates Set Stock Market ‘Warning Line’

Meanwhile, pressures in the rate market are another important variable.

Over the past week, US Treasury yields have moved sharply higher, with the real 10-year yield hitting its highest level since 2023 and the real 30-year yield nearing 3%—a level breached only briefly during the global financial crisis in recent decades.

(Major US stock maturities yield declining on Monday)

John Flood, citing a Goldman analysis framework, notes that when rates rise by more than two standard deviations within a specific cycle, stocks tend to come under pressure. Measured by current conditions, this threshold corresponds to roughly a 50 basis point rise in the 10-year nominal yield within a month.

Projecting from this, if the 10-year nominal yield rises to around 5%, or the real 10-year yield climbs to about 2.7%, stocks are expected to face clear resistance. Rising rate volatility also puts additional upward pressure on equity implied volatility.

Multiple Variables Compound, Limiting Market Aggression

John Flood also listed several overlapping uncertainties.

Wednesday’s Fed policy meeting (market pricing about a 35% chance of a rate hike), post-market earnings for Meta and Microsoft that day, plus Thursday’s Apple and Amazon reports, all create a dense risk event window, keeping investors from acting aggressively.

The repeated escalation of Iran’s geopolitical situation is also consuming market attention, and Trump’s tough stance on negotiation progress adds further variables.

Even so, Flood maintains a relatively moderate medium-term outlook. He believes individual stock volatility will remain high, but there is still upside for indexes, on the basis of expected continued corporate earnings, and that the Fed is unlikely to hike either this week or in September—something the market has already fully priced in.

Fundamental long/short hedge funds fell 4.5% in July, the second-worst monthly performance since 2023, but are still up around 13% year-to-date, so the overall picture has not reversed.

Risk Alert and DisclaimerThe market has risks, invest cautiously. This article does not constitute personal investment advice and does not take into account the unique investment goals, financial situation or needs of individual users. Users should consider whether any opinions, views or conclusions in this article are suitable for their particular situation. Investment based on this content is at your own risk. ```