Nvidia Falls 2.9% on Aug. 24 for a Seventh Straight Down Session Ahead of Its Aug. 26 Earnings Report
The chipmaker's shares have fallen seven sessions in a row, its longest such run since September 2022, as investors debate how much of the AI buildout is being paid for with money supplied by chipmakers themselves.
A 2.9% Drop Has a $105 Billion Backstory
Nvidia stock fell 2.9% on Monday, Aug. 24, 2026. That doesn't sound dramatic on its own. But it was the seventh losing session in a row, the longest such streak since September 2022, and together those seven days have wiped about 7.5% off the stock[1].
The Nasdaq slipped 0.76% that day and the S&P 500 fell 0.28%, while the Dow actually rose 0.26%[12]. So this isn't a market-wide panic. It's concentrated in Nvidia and its chip peers, including Micron and SanDisk, which also fell on a weekend report that Nvidia may raise prices on some AI servers[12]. Nvidia reports quarterly earnings after the close on Wednesday, Aug. 26, which means the stock is heading into its biggest test of the year already bruised[14].
What's dragging it down has a name investors keep repeating: "circular financing." And whether that term is a fair description or an unfair smear is the whole fight.
The Company That Sells the Chips Is Also Lending the Money
Here's the tension at the center of this story, and it's real: Nvidia sells AI chips to companies like OpenAI. Nvidia has also been helping arrange the financing those companies use to buy them[4][5]. Both of those things are true at once, and that's exactly what has investors unsettled.
On Aug. 10, Nvidia announced it would help raise more than $500 billion from outside investors, including Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR, to fund AI data centers[4]. A week later, on Aug. 17, a securities filing revealed something more specific: Nvidia is guaranteeing up to $105 billion tied to an OpenAI data center campus in Pike County, Ohio[2][3].
The worry is straightforward. If Nvidia is both the seller and the financier, some of its reported sales might not reflect independent demand at all — it could just be Nvidia helping its own customers buy its own product[5][10]. Critics, including investor Michael Burry, have described the wider AI industry as a web of circular financing with Nvidia at the center[17].
Nvidia's own paper trail complicates the simplest version of that story, though. The Wall Street Journal reported on Aug. 14 that Nvidia had already cut its proposed Ohio backstop from $250 billion to less than $120 billion, before the two sides settled on $105 billion[13]. That walk-back is read two different ways, and both readings matter.
One Number, Two Opposite Readings
To skeptics, the fact that Nvidia shrank its own guarantee by more than half in a matter of days is the strongest evidence something was off with the original plan[13][6]. If the structure held up fine, why retreat that far, that fast?
To Nvidia and its defenders, the same fact is proof the system is working the way it should: investors pushed back, and management adjusted[13][1]. That's not a company caught hiding something — that's negotiation playing out in public.
CEO Jensen Huang has rejected the "circular financing" label directly. Asked about the Ohio deal, he said flatly: "No. OpenAI will pay the lease"[14]. On the broader $500 billion program, Nvidia's position is that "the capital is not Nvidia revenue" — it's outside money the company is helping attract, not money flowing out of its own accounts[4][14]. Huang has also pointed to roughly $600 billion of potential Nvidia compute purchases tied to OpenAI's plans through 2030, arguing the underlying demand is large and real[14].
The actual filing supports part of his case. A "residual value guarantee" is not Nvidia paying anyone's rent. It's a promise that if OpenAI defaults on its lease or goes insolvent, Nvidia will cover the gap between what the leased equipment and site are worth at that point and what's still owed[2][15]. It costs Nvidia nothing today. It's a contingent liability — a bill that only comes due if something else goes wrong first, capped at $105 billion[2][15].
That distinction is why bulls call the guarantee cheap insurance and bears call it hidden leverage. They're arguing about the same instrument. The real question underneath it is one nobody can answer yet: what will a five-year-old AI chip be worth when this lease matures? If used GPUs hold their value well, the guarantee rarely gets triggered. If they depreciate fast, Nvidia could be on the hook for a lot of money that isn't sitting on its books as debt today[11][15].
The Supplier's Real Problem
Step back from the accounting fight and there's a simpler pressure driving all of this. Nvidia's growth depends on customers who can actually pay for data centers that cost tens of billions of dollars and take gigawatts of power to run. Most companies, even large ones, can't fund that entirely out of their own cash[4][11].
So Nvidia faces a choice: help its customers find the money, or watch orders slow down. Financing the buildout — through equity stakes, credit guarantees, or arranging outside capital — turns a customer's funding problem into Nvidia's own contingent risk. That's a trade Nvidia is choosing to make because losing the order is more expensive[4][11].
Nvidia isn't the only party with something at stake in that trade. OpenAI gets access to compute it couldn't otherwise afford to build. SB Energy, the SoftBank-owned developer building the Ohio campus, takes on construction risk in exchange for a 20-year lease with OpenAI as tenant[2][3]. The private-credit firms managing that $500 billion pool get yield on assets partly backstopped by one of the world's most cash-rich companies[5].
Fortune has emphasized who ultimately supplies that capital: pension funds and other institutional investors, meaning the money at risk isn't limited to Nvidia shareholders[5]. That's a fair point about where the exposure spreads, even if it doesn't settle whether the exposure is actually dangerous.
A Different Story Being Told in Shanghai
Not every account of this selloff is about financing at all. On July 27, Chinese memory chipmaker CXMT went public in Shanghai and its stock jumped 466% on day one, reaching a market value near $487 billion[8][9]. That single event rattled investors in Micron and SK Hynix, Nvidia's memory-chip peers[9].
The South China Morning Post framed CXMT's debut as proof that Chinese memory chips are now a real competitive threat, not a footnote[9]. That's a different explanation for the same falling stock prices — not "the financing looks shaky" but "the competition just got stronger." Reuters, by contrast, credited both forces at once: AI financing worries and Chinese competition, together, driving the broader chip selloff[8].
Even the SCMP piece includes a caveat that matters: CXMT can't yet make the advanced memory chips that AI servers actually need[9]. So the competitive threat is real but not immediate. Untangling how much of Nvidia's seven-day slide is about OpenAI's lease terms versus how much is about a Shanghai stock debut is, at this point, a matter of judgment, not settled fact.
What Wednesday Actually Tests
Nvidia heads into its Aug. 26 earnings report with all 26 analysts covering the stock still rating it a buy, according to TipRanks[1]. That's a notable gap between Wall Street's public sentiment and the seven straight days of selling that got it here.
Meanwhile, the broader signal that something is being priced in shows up elsewhere: the cost of insuring corporate debt tied to Oracle, Alphabet, Amazon, Meta, Broadcom and Nvidia — measured through credit-default swaps — has hit record highs[8]. That's a market saying the risk of default, however small, is being taken more seriously than it used to be.
None of that proves the "circular financing" critics right or wrong. The term itself describes a real financing structure, but it isn't an accounting category, and no regulator has applied it to Nvidia's deals. What's actually on record is narrower than a lot of the early headlines suggested: an 8-K filing, a $105 billion cap, and a payment obligation that only activates if OpenAI can't pay[2]. Wednesday's guidance from Nvidia is the next piece of hard data that will start to settle which read of that filing was closer to right.
Summary
Nvidia shares fell 2.9% on Monday, Aug. 24, 2026. That was the seventh straight losing session, the company's longest such streak since September 2022, and the seven days together took the stock down about 7.5%[1]. Other chip stocks fell too. The company reports quarterly results after the close on Wednesday, Aug. 26[14].
The argument driving the slide has a name: "circular financing." The worry is simple. Nvidia sells AI chips. Nvidia also helps its customers get the money to buy those chips. So some of Nvidia's sales may not reflect outside demand at all[5][10]. The slide began around Aug. 10, when Nvidia announced deals with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to raise more than $500 billion of outside money for AI data centers[4]. A week later, a securities filing showed Nvidia guaranteeing up to $105 billion tied to an OpenAI data center campus in Pike County, Ohio[2][3].
Nvidia says the criticism has it backwards. CEO Jensen Huang argues the $500 billion program exists precisely to bring in independent investors, that "the capital is not Nvidia revenue," and that on the Ohio site, "OpenAI will pay the lease"[4][14]. The filing supports part of his point: Nvidia pays only if OpenAI defaults or goes insolvent, and the promise covers the leftover value of the equipment and site, not the rent itself[2][15].
There is a second explanation for the same price moves, and it has little to do with financing. Chinese memory maker CXMT went public in Shanghai in late July and jumped 466% on day one, reaching a market value near $487 billion[8][9]. That spooked investors in Micron and SK Hynix. Reuters reported the chip selloff was driven by both AI financing worries and Chinese competition[8]. Monday's specific drop was also linked to a weekend report that Nvidia plans to raise prices on some AI servers[12]. Which of these forces matters most is genuinely disputed.
The Event
Nvidia stock closed down 2.9% on Monday, Aug. 24, 2026, its seventh consecutive losing session and its longest losing streak since September 2022; the seven sessions amount to a roughly 7.5% decline[1]. The Nasdaq Composite fell 0.76% to 25,980 and the S&P 500 fell 0.28% to 7,653, while the Dow Jones Industrial Average rose 0.26% to 53,417[12]. Memory chip stocks including Micron and SanDisk also declined, which the Motley Fool tied to a weekend report that Nvidia plans to raise prices on some AI servers[12]. Nvidia is scheduled to report fiscal second-quarter 2027 results after the market close on Wednesday, Aug. 26[14].
Undisputed Facts
- Nvidia shares fell for a seventh straight session on Aug. 24, 2026, the longest losing run since September 2022[1].
- On Aug. 10, 2026, Nvidia announced arrangements with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to mobilize more than $500 billion of third-party capital for AI infrastructure[4].
- A securities filing dated Aug. 17, 2026 disclosed residual value guaranties from Nvidia to SB Energy covering roughly 4.25 gigawatts of IT load, with Nvidia's cumulative payment obligation capped at $105 billion[2].
- Under that filing, Nvidia's payments are triggered only if OpenAI defaults on a lease or becomes insolvent; Nvidia may extend credit support to about 3.8 additional gigawatts at its sole discretion[2].
- Nvidia is separately investing $1.5 billion in SB Energy, the SoftBank-owned developer building the PORTS-Pike Technology Campus in Pike County, Ohio, under a 20-year OpenAI lease[2].
- The Wall Street Journal reported on Aug. 14 that Nvidia had reduced a proposed backstop from $250 billion to less than $120 billion before the parties settled at $105 billion[13].
- CEO Jensen Huang publicly rejected the "circular financing" description, writing that "the capital is not Nvidia revenue" and, on the Ohio lease, "No. OpenAI will pay the lease"[4][14].
- Chinese memory maker CXMT rose 466% on its Shanghai debut on July 27, 2026, raising about $8.6 billion and reaching a market value of roughly $487 billion[8][9].
- Nvidia is scheduled to report fiscal second-quarter 2027 results after the close on Aug. 26, 2026[14].
The Pressure
Strip away the moralizing and blame. What structural realities persist regardless of which narrative wins?
- The supplier's growth problem
- Nvidia's growth depends on customers who can pay for gigawatt-scale buildouts. Most cannot fund that from operating cash. So the supplier either finds the money for them or accepts slower orders[4][11].
- Contingent, not spent
- A residual value guarantee costs nothing today. It is a promise: if the tenant defaults, Nvidia covers the shortfall between what the leased assets are worth and what is owed, capped at $105 billion[2][15]. That is why bulls call it cheap and bears call it hidden leverage — the same instrument, read two ways.
- The used-GPU question
- The guarantee's real value turns on what AI hardware is worth in five or ten years. Nobody knows. If used GPUs hold value, the backstop rarely pays out. If they depreciate fast, it is a large liability sitting off the income statement[11][15].
- Two selloffs wearing one label
- AI-financing doubt and Chinese chip competition hit the same tickers in the same weeks[8][9]. Attributing the whole move to either one is a choice, not a finding.
- The earnings gate
- Positioning ahead of a major report amplifies moves in both directions. The Aug. 26 results and, more importantly, the guidance, will settle part of the argument with data[12][14].
Material realityNvidia has fallen about 7.5% over seven sessions, a real but modest drawdown for a stock of its volatility[1]. The Ohio guarantee is legally $105 billion, contingent on OpenAI default, and covers residual asset value — a narrower obligation than several early reports describing $250 billion suggested[2][13][15]. Data centers are being poured in Pike County either way. Meanwhile the cost of insuring AI-linked corporate debt, measured by credit-default swaps on Oracle, Alphabet, Amazon, Meta, Broadcom and Nvidia, has hit record highs, and chip stocks shed more than $1 trillion in the late-July rout[8][18]. CXMT exists and is shipping less-advanced memory at scale[9]. None of these facts changes based on which narrative wins.
Narrative as a weaponThree groups are working the frame. Nvidia is pushing hard to redefine its financing as importing outside capital rather than manufacturing its own demand — hence Huang's flat public denials and the emphasis on "the capital is not Nvidia revenue"[4][14]. Short sellers and bearish commentators want the market to treat AI revenue as credit-dependent, and their strongest card is Nvidia's own retreat from $250 billion to $105 billion[13][17]. Chinese and Asian outlets want the same price action read as evidence that domestic chipmakers are closing the gap, which supports Beijing's self-sufficiency case[9]. Readers should notice that the term "circular financing" is itself a framing device: it describes a real structure, but it is not an accounting category and no regulator has applied it here. The verifiable record is the 8-K, and it is narrower than most headlines on either side[2].
How Each Side Sees It
Each major actor’s view — how it frames things, its underlying incentive, and how it’s materially affected. Tap a side to read it.
Frames it asNvidia says it is doing what any supplier does in a shortage: helping serious buyers finance long-lived equipment. Huang's core claim is that the $500 billion program brings outside, long-term institutional money into AI data centers, which reduces reliance on Nvidia's own balance sheet rather than increasing it[4]. On Ohio, the company points to the actual contract: it guarantees the leftover value of the assets, not the rent, and pays nothing unless OpenAI defaults[2][15]. Huang also argues the demand is real and large, citing roughly $600 billion of potential Nvidia compute tied to OpenAI's plans through 2030[14].
WhyNvidia needs customers to have the capital to place multi-year orders. Credit support turns a buyer's financing problem into Nvidia's contingent liability, which is cheaper than losing the order[4][11].
Impact on themThe stock has fallen roughly 7.5% over seven sessions and the company reports earnings on Aug. 26[1][14]. It also cut a proposed backstop by more than half after investors objected — a direct, visible cost to its freedom of action[13].
Frames it asTheir case is about the quality of the revenue, not the size of it. If a chipmaker acts as vendor, financier, investor and guarantor at once, then sales can reflect vendor-backed credit rather than independent buyers with their own cash[5][10]. Michael Burry has described the AI complex as a circular financing web with Nvidia at the center[17]. The strongest single piece of evidence they cite is Nvidia's own retreat: a backstop shrinking from $250 billion to $105 billion in days suggests the original structure was hard to defend[13][6]. They also point to credit-default swaps — contracts that pay out if a company defaults on its debt — tied to Oracle, Alphabet, Amazon, Meta, Broadcom and Nvidia hitting record highs, meaning it now costs more than ever to insure that debt[8].
WhySome are hedging real exposure; some profit directly if the stocks fall. Either way they want the market to price AI revenue as credit-dependent rather than organic[17].
Impact on themBearish positioning has been rewarded during the streak, but Nvidia's Aug. 26 report is a hard test: on TipRanks, all 26 covering analysts rate the stock a buy[1].
Frames it asThey argue the financing is ordinary infrastructure practice. Power plants, aircraft and fiber networks are all built with long leases and credit support from parties who benefit from the asset existing. In a market where the best chips are scarce, locking in supply with long-term commitments plus financing is how you get built at all[11]. On the Ohio campus, OpenAI is a 20-year tenant paying rent, and SB Energy is the developer taking construction risk[2][3].
WhyAccess to gigawatts of compute at a fixed cost, and — for the lenders — yield on assets that a large, cash-rich chipmaker has partly backstopped[5].
Impact on themCheaper capital if the guarantee structure holds; a much harder funding market if investors reprice AI debt. Fortune reported the $500 billion push draws on institutional pools that include retirement money, which is why the risk travels beyond tech shareholders[5].
Frames it asBeijing-aligned and Asian market coverage argues the story is competition, not accounting. CXMT's Shanghai listing showed domestic memory chips are now credible enough to move global prices, and its 466% first-day gain is treated as market validation of China's chip self-sufficiency drive[9]. From this vantage, U.S. chip valuations are falling because the moat is shrinking, not because the books are strange.
WhyDemonstrate that export controls failed and that domestic substitution works; attract capital to Chinese chip listings[9].
Impact on themCXMT's debut coincided with drops in Micron and SK Hynix shares[9]. SCMP itself notes CXMT cannot yet make the advanced memory that AI data centers require, which limits the near-term threat[9].
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The Bias Ledger average rating 4.4
The same story, as framed by outlets across the spectrum, ordered least to most biased. The bias score (1 = straight, 10 = heavily spun) is an AI assessment of that framing — click an outlet to see its track record. The tell is the word choice or omission that reveals the angle.
| Outlet | Vantage | Bias | How they frame it | The tell |
|---|---|---|---|---|
| Reuters | U.K.-based wire, U.S. center | 2 | "U.S. chip stocks extend sell-off on AI financing, China competition worries" | The most even framing found: names two causes rather than one, and attributes both to analysts. Little editorializing. |
| The Wall Street Journal | U.S. center-right (news pages); Murdoch-owned | 3 | Reported that Nvidia scaled back its proposed OpenAI data center backstop from $250 billion to less than $120 billion. | Frames the story as investor pressure working. Accurate and well-sourced, but the emphasis on the walk-back implies the original plan was the problem and the market fixed it. |
| CNBC | U.S. center, business-audience | 3 | "Nvidia is trying to quiet 'circular financing' accusations. Wall Street is unsure it will" | Puts the contested term in scare quotes and gives Huang's rebuttal directly, but the "Wall Street is unsure" construction lets unnamed sentiment carry the skeptical verdict. |
| Forbes | U.S. center-right business | 4 | "Nvidia Stock Tumbles Another 2%—Pacing For Seventh-Straight Drop Ahead Of Earnings" | Ticker-tape framing. "Tumbles" and "pacing for" dramatize a 2.9% move, and the piece balances the streak against all 26 analysts rating the stock a buy — a reassurance the bear case doesn't get. |
| NPR | U.S. center-left public radio | 6 | "NVIDIA is about to spend $750 billion on AI. Critics are calling it a bubble" | Puts the critics' verdict in the headline while Nvidia's rebuttal sits in the body. The $750 billion is deal value, not cash Nvidia is spending — the verb "spend" overstates the outlay. |
| South China Morning Post | Hong Kong, owned by Alibaba; broadly aligned with Beijing on tech-competition stories | 6 | "The CXMT shock: how China's viable alternatives punch Nvidia, Micron, SK Hynix shares" | "Punch" and "viable alternatives" recast a valuation selloff as a Chinese win. Circular financing barely appears. To its credit, the piece concedes CXMT cannot yet make advanced AI memory. |
| Fortune | U.S. center-left business | 7 | "Nvidia found a new way to keep the AI boom funded: your retirement money" | "Your retirement money" moves the story from corporate finance to personal threat before establishing that pension losses are likely. The second person is the spin. |
References
- Nvidia Stock Tumbles Another 2%—Pacing For Seventh-Straight Drop Ahead Of Earnings — Forbes · U.S. center-right business magazine; contributor-heavy model
- NVIDIA Corporation Form 8-K, filed August 17, 2026 — U.S. Securities and Exchange Commission (EDGAR) · Primary source; company-filed regulatory disclosure
- Nvidia backing $105 billion in financing for OpenAI data center in Ohio — CNBC · U.S. center, business-audience; owned by Comcast/NBCUniversal
- Nvidia is trying to quiet 'circular financing' accusations. Wall Street is unsure it will — CNBC · U.S. center, business-audience; owned by Comcast/NBCUniversal
- Nvidia found a new way to keep the AI boom funded: your retirement money — Fortune · U.S. center-left business magazine
- OpenAI data center deal with Nvidia comes in $145 billion lower than reported — Fortune · U.S. center-left business magazine
- Chip Stock Rout Deepens on AI Debt Jitters, China Competition — Bloomberg · U.S. center, markets-focused; owned by Michael Bloomberg
- U.S. chip stocks extend sell-off on AI financing, China competition worries — Reuters · U.K.-based international wire service; U.S. center
- The CXMT shock: how China's viable alternatives punch Nvidia, Micron, SK Hynix shares — South China Morning Post · Hong Kong daily owned by Alibaba; generally aligned with Beijing on tech competition
- NVIDIA is about to spend $750 billion on AI. Critics are calling it a bubble — NPR · U.S. center-left public radio; member-station and donor funded
- Nvidia's new $500B plan is risky but brilliant, especially for aging GPUs — TechCrunch · U.S. tech-industry trade press; generally sympathetic to tech-sector framing
- Stock Market Today, Aug. 24: Nvidia Extends Losses as Tech Stocks Retreat — The Motley Fool · U.S. retail-investor publisher; subscription-driven, long-equity house view
- Nvidia scales back funding guarantee for Ohio OpenAI data center, WSJ reports — The Wall Street Journal · U.S. center-right; News Corp-owned (news pages distinct from its conservative editorial board)
- Nvidia-OpenAI Deal Isn't 'Circular Financing,' Says Jensen Huang, Sees $600B Compute Opportunity — Sahm Capital · Saudi-based brokerage news desk; market-participant publisher
- NVIDIA Did Not Guarantee The Rent. It Guaranteed The Resale. — Global Data Center Hub · Independent data-center industry newsletter; industry-insider vantage
- 'A lot of panic around the AI investment': How a chip slump is driving the Nasdaq toward correction — Fortune · U.S. center-left business magazine
- Michael Burry Sounds the Alarm Again: AI Is a Circular Financing Web With Nvidia In the Middle — 24/7 Wall St. · U.S. retail-finance aggregator; traffic-driven, headline-forward
- Chip stocks shed more than $1 trillion as selloff hits companies powering AI boom — CNBC · U.S. center, business-audience; owned by Comcast/NBCUniversal
- NVDA Stock's 7-Day Losing Streak Sets Up Make-Or-Break AI Earnings Test — Benzinga · U.S. retail-trading news service; subscription and data-driven