The AI boom has long been shadowed by concerns about its shaky financial foundations: vast pools of capital, high-risk bets, and a U.S. economy increasingly reliant on the sector's continued expansion. The past month has brought these worries into sharp focus, with CoreWeave's stock tumbling amid its heavy debt load and renewed fears of an AI bubble.
But the company escaping scrutiny in this narrative is Nvidia, whose dominance over chip design and enormous capital reserves have allowed it to shape the AI capital market to its own advantage. By doing so, Nvidia has tightened its grip on AI infrastructure while destabilizing the broader economy, all without meaningful oversight.
From Gaming Chips to AI's Central Banker
Nvidia started in 1993 as a niche player optimizing semiconductors for gamers. But the early 2010s marked a pivot as interest in artificial intelligence surged. AI models demanded immense computational power, and Nvidia's graphics processing units (GPUs) proved ideal. In 2016, co-founder Jensen Huang personally gifted an Nvidia supercomputer to OpenAI, then led by Elon Musk and Sam Altman, effectively ensuring OpenAI's software would run on Nvidia chips. Nvidia also courted researchers with free hardware, and by 2023 its stock began a meteoric rise, culminating in mid-2025 with Nvidia becoming the world's most valuable public company.
Once the AI ecosystem standardized on Nvidia GPUs, the company's proprietary software stack created a lock-in that made switching nearly impossible. The centerpiece is CUDA, a software language optimized for Nvidia chips. While chips can run without it, performance suffers drastically, so most AI applications depend on it. Competitors have tried to build translation layers, but Nvidia's 2024 licensing update barred using CUDA on rival chips. The company also deploys engineers to help hyperscalers optimize their Nvidia systems, reinforcing the dependency. As Nvidia executives noted in their latest earnings call, "Customers can still mix and match. However, most companies just don't have the skills to do that or a desire to do that."
A Financial Web Beyond Regulation
This strategy has paid off: Nvidia controls nearly 90% of the GPU design market and enjoys gross margins of 70-75%. Its stock price surge has given it the capital to act, as The New York Times put it, as "Silicon Valley's central banker." Nvidia now offers complex financing deals to partners, invests heavily in infrastructure that supports its chips (such as neoclouds), and explores acquisitions. While Nvidia has long backed AI startups, its deal-making has accelerated recently.
By operating as an unregulated banker, Nvidia is shaping the U.S. economy outside the guardrails meant to prevent risky bets from collapsing the financial system. The company has a direct interest in fueling AI mania: the more models trained and data centers built, the more Nvidia hardware is sold. To accelerate adoption, Nvidia offers financing that typically requires purchasing its products and upgrading to newer chips on a regular schedule.
Nvidia has also invested directly in neocloud companies—data centers that rent cloud capacity to AI firms—in exchange for commitments to buy Nvidia hardware and upgrade it periodically. Its largest such investment is a nearly 7% stake in CoreWeave. In late 2024, Nvidia acquired Run:ai, and in its most recent earnings call announced $18 billion in equity investments for the rest of the fiscal year, with private holdings nearly doubling from 2025 to 2026. In August 2026, The Information reported Nvidia's plan to acquire Hugging Face, a platform for open-source AI models, for $12.9 billion. Huang has noted that AI agents use "15-100x" the compute of a human using an AI model; an Nvidia-owned Hugging Face could prioritize agentic models, driving demand for compute and energy—benefiting Nvidia.
In early August 2026, Nvidia announced a partnership with Apollo, BlackRock, Goldman Sachs, and KKR to "turn Nvidia compute and full-stack AI infrastructure into an investable asset class for global capital," pooling funds to offer "attractive rates" for enterprises to invest in Nvidia infrastructure. This financial engineering mirrors the kind of shadow banking that preceded the 2008 crisis, and experts warn that a sudden downturn in AI spending could trigger a systemic financial crisis.
The political stakes are high. As Washington debates AI regulation, Nvidia's unchecked power raises questions about market concentration and financial stability. Meanwhile, competitors like China are advancing rapidly, and some analysts argue the U.S. is falling behind Beijing in the global AI race. The surge in energy demand from AI data centers also poses policy challenges. Nvidia's role as both the dominant chipmaker and an unregulated financier may be the most dangerous financial web in the AI bubble—one that demands closer scrutiny from regulators and policymakers.
