Nvidia stock fell 5% on July 27 after the Wall Street Journal reported that the chipmaker is in talks to guarantee roughly $250 billion in financing for OpenAI’s massive data center project in Ohio, sparking concerns about the sustainability of AI infrastructure investments.
The proposed guarantee would cover OpenAI’s data center lease and debt financing costs, but would not extend to the Nvidia chips inside the facility, according to the WSJ. The deal marks a significant expansion of Nvidia’s financial commitment to OpenAI beyond its existing chip supply relationship.
Nvidia’s 5% decline came as part of a broader chip sector selloff. AMD dropped 8% and Dell slid 4% on the same day, according to 247 Wall Street, as investors reassessed the economics of AI infrastructure expansion.
Analysts flagged concerns about what some described as circular financing dynamics in the AI sector. According to GuruFocus, the $250 billion guarantee “raises concerns over AI investment viability,” as the arrangement creates a complex web of dependencies where Nvidia backs financing for data centers that will primarily purchase Nvidia chips. Financial Post reported that the deal has “revived fear of AI circular financing,” a pattern where companies finance purchases of their own products through interconnected arrangements.
The financing arrangement differs from Nvidia’s previous $100 billion investment commitment to OpenAI, announced in September 2025, which involved direct equity stakes in the company. The new guarantee structure allows OpenAI to raise debt at more favorable terms by having Nvidia’s backing, according to reporting from StockTwits, since lenders view the chipmaker’s financial support as reducing default risk.
Wall Street maintained overall confidence in Nvidia, with analysts setting an average 12-month price target of $302.83, implying a 54% upside from the stock’s level after the selloff. However, the immediate market reaction reflected investor wariness about whether the scale of AI infrastructure spending could be sustained profitably.
Sources
- Wall Street Journal — reported Nvidia in talks to guarantee $250 billion for OpenAI data center financing in Ohio
- Reuters — confirmed the guarantee covers data center lease and debt financing, not chip purchases
- 247 Wall Street — reported Nvidia fell 5%, AMD dropped 8%, Dell slid 4% on July 27
- GuruFocus — noted analyst concerns that the guarantee raises questions about AI investment viability
- Financial Post — reported the deal revived fears of circular financing in the AI sector
- StockTwits — explained how Nvidia’s backing allows OpenAI to raise debt at more favorable terms
- Stock Analysis — reported average analyst price target of $302.83, implying 54% upside
