Nvidia Backstopping Financing Everywhere? "Bond King" Gundlach Warns Move Signals Potential Market Top

 

As Nvidia teams up with Wall Street to facilitate compute financing, DoubleLine Capital Chief Executive Officer Jeffrey Gundlach—widely known as the "Bond King"—warned that Wall Street’s attempt to turn artificial intelligence chips into an investable asset class may signal that the market is nearing a peak.

 

Gundlach criticized Nvidia's newly announced partnerships with six financial giants designed to mobilize over $500 billion for AI infrastructure.

 

Under the arrangement, Nvidia acts as a consortium coordinator rather than a direct balance-sheet lender, leveraging high credit-grade structures to help lower borrowing costs for end customers.

 

According to an announcement released last Monday, Nvidia signed agreements with Apollo Global Management, Blackstone, BlackRock, Brookfield Asset Management, Goldman Sachs, and KKR to establish dedicated compute financing platforms.

 

"We are bringing together the world’s leading providers of long-duration capital to independently underwrite AI infrastructure," Nvidia CEO Jensen Huang said in a statement.

 

"These financing platforms will help customers access scarce computing capacity at scale and build AI factories to power every industry and nation in the AI era."

 

Gundlach remains skeptical, questioning the prudence of using rapidly evolving technology as collateral for long-term debt.

 

"Assets of unknown life as collateral for long term debt?" the DoubleLine chief executive wrote on X, adding that the plan "will not likely age well."

 

Gundlach likened the concept to issuing 30-year asset-backed securities collateralized by warehouses of bananas, even if they were "newly engineered bananas of unknown life."

 

His critique centers on a duration mismatch between long-dated debt and the useful lifespan of advanced silicon.

 

While AI processors generate robust cash flows during periods of peak demand, the rapid pace of technical innovation raises concerns that current chips could depreciate significantly before the loans funding them are paid off.

 

In a separate post on Saturday, Gundlach noted that "nobody rings a bell at the top of risk markets," advising investors to watch for new asset classes built on financial engineering and supported by what he characterized as "questionable" credit ratings.

 

Other prominent market observers have expressed similar sentiments. Billionaire investor Mark Cuban remarked that "chips as an asset class will be the new crypto."

 

Meanwhile, prominent short seller Michael Burry has long cautioned that corporate spending on AI hardware is overly aggressive, arguing that processors will face rapid obsolescence as architectures advance.