More bullish on Nvidia now

More bullish on Nvidia now despite “vendor financing” boosting GPU demand headlines!

By @LazyTrader 6.10.2025

Nvidia recently pledged up to $100 billion in OpenAI investments for 10 gigawatts of compute. It also owns a $3 billion stake (7%) in CoreWeave, which has funnelled $7.5 billion into Nvidia GPUs via multi-billion deals with OpenAI.

This appears like "circular cash flows”, where Nvidia funds buyers who buy more Nvidia gear, akin to “vendor financing”, which can only keep working until real demand tanks!

Hyperscalers like Microsoft, Google, and Amazon aren't splurging out of blind optimism—they're spending to avoid extinction in a zero-sum AI arms race. Compute is the "central currency" of this era, and falling behind means ceding market dominance overnight. For example, if Google underinvests, it cedes search dominance to agentic AI from others; the cost of irrelevance far exceeds its $75B+ annual capex.

AI leaders like OpenAI and Anthropic are fundamentally compute-constrained, not limited by talent or ideas. Doubling their compute could nearly double revenue in a short period (i.e., months not quarters or years) by enabling smarter, larger models that unlock consumer/enterprise adoption.

This creates a virtuous AI compute demand cycle: More inference deployments amortize training costs, demanding larger models that require even more Nvidia-powered training.

Hyperscalers must front-load AI infrastructure to capture this flywheel: Building "AI factories" ensures they hit service-level agreements and maintain time-to-market advantages for AI companies, as even a 6-month lag lets rivals like startups leapfrog via faster model training cycles.

Supply chain realities amplify this urgency— Nvidia holds a monopsony (single buyer dominance) over high-bandwidth memory (HBM), the critical component for GPUs. This caps global supply: Nvidia could produce 50 million GPU dies annually but is limited to ~5.5 million due to HBM and interposer constraints. High HBM margins discourage suppliers from expanding capacity, as it would dilute profits. Nvidia's monopsony over HBM creates 2+ year backlogs, therefore, hyperscalers spend pre-emptively to secure priority slots, writing "big checks" years ahead.

In essence, Nvidia's virtual monopsony over HBM caps global output, ensuring they get whatever supply they want, while competitors scramble. This turns shortages into a self-reinforcing moat for Nvidia.

Nvidia’s trifecta of technical prowess, supply dominance, and market lock-in look nearly impossible for other AI chip competitors to breach. Energy grids and power constraints may force a 2027/28 recalibration around the current AI infrastructure spending hype, but for now, it's “build or risk being locked out forever”.

Nvidia's not financing demand—it's minting the AI economy's gold standard.

Become a FULL ACCESS member today to view all our Current Trades…

For more trade ideas visit the Daily Market Exchange.

Subscribe to receive more Trade Alerts.

About Us

The Daily Market Exchange is a global community where passionate investors and traders share ideas, strategies, and market insights. Stock selection is challenging, and market timing is even tougher—why tackle them alone?

Our members benefit from the collective wisdom and experience of a global network. Unsure about a stock idea? Collaborate with others to refine your research and gain confidence from their sector expertise. Struggling to find fresh trade ideas? Join the Daily Market Exchange today and access our members’ latest analysis and market strategies!

Read more about us HERE.

_{Disclaimer: The information provided here is for informational and educational purposes only and should not be considered financial, investment, tax, or legal advice. All opinions, analyses, and suggestions are based on publicly available data and general observations, not personalized recommendations. Stock prices, market conditions, and financial outcomes can change rapidly—always verify data independently. Past performance is not indicative of future results, and investing involves risk, including the potential loss of principal.}