Analyst Highlights Red Flags in Nvidia (NVDA)-OpenAI $100 Billion Deal - 'Feature of Past Bubbles'

We recently published 10 Stocks to Watch as Investors Scramble to Pour Money into AI Trade. NVIDIA Corporation (NASDAQ:NVDA) is one of the stocks that caught analysts' attention.

Tom Hancock, GMO portfolio manager, recently talked about Nvidia’s $100 billion deal with OpenAI during an interview on CNBC. He believes the company is “losing” on the deal.

“I think vendor financing has a pretty spotty history, frankly. It’s been a feature of past bubbles that we’ve seen. NVIDIA Corp (NASDAQ:NVDA) is basically giving hundreds of millions here. Roughly 35 million will go back into NVIDIA Corp (NASDAQ:NVDA) revenue down the road. It’ll look like revenue for NVIDIA Corp (NASDAQ:NVDA), but it’s not real cash they’re getting—they’re losing on the deal. Nvidia has also underwritten some of Coreweave’s investment. This is not to say it’s a bubble or anything fraudulent, but it demonstrates how much capital intensity there is in building out AI infrastructure at a time when monetization outside some in-house applications at companies like Meta or Alphabet is very unclear, given the scale of investment required.”

Nvidia’s Hopper Infrastructure and now Blackwell form the core of AI infrastructure for LLM training and inference. But Nvidia’s growth is slowing compared to previous quarters amid competition and capex spending limitations from major companies. In the recently reported quarter, Nvidia’s annual revenue growth came in at 56%, compared with nearly 100% YoY growth in the past.

With its strong position in the data center market and rising demand, Nvidia is likely to keep growing, though not at the same pace it has in the past. Increasing competition from major companies like Broadcom is also expected to impact Nvidia’s margins in the long term.

Columbia Threadneedle Global Technology Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its second quarter 2025 investor letter:

“Shares of core holding NVIDIA Corporation (NASDAQ:NVDA) surged during the quarter, after the company reported strong quarterly results driven by very strong demand for the company’s next-generation Blackwell architecture. The new Blackwell chips deliver compelling performance improvements, with up to 30x faster inference capabilities as compared with prior generations and, importantly, are much more energy efficient. The company also proved resilient against a backdrop of increasing geopolitical tension, as sovereign deals announced in parts of the world such as the Middle East and Taiwan helped to offset headwinds that resulted from U.S. export restrictions on China sales.”

While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.