Daniel Newman Says Nvidia's AI Spending Isn't 'Circular Financing'—It's 'Prudent Investing'

Daniel Newman, CEO of The Futurum Group, praised Nvidia Corp. (NASDAQ:NVDA) for its strategic investment approach, despite concerns about an AI bubble.

Newman took to X on Sunday to laud the tech giant for using its free cash flow to invest in the ecosystem that will enable it to grow larger and generate more cash flow.

He stated, “AI Bubble bears will call it circular financing. I call it prudent investing.”

Nvidia Expands AI Investment Push

Newman’s post comes in the wake of Nvidia’s significant investments in AI infrastructure companies such as OpenAI. The tech giant, with $97 billion in free cash flow at the end of last fiscal year, doubled down on its strategy this year, backing companies that could also become customers for its chips. In 2026, Nvidia surpassed $40 billion in investment commitments while increasing exposure to public equities.

Last week, Nvidia secured investment agreements with data center operator IREN Ltd. (NASDAQ:IREN) for up to $2.1 billion and with glass maker Corning Inc. (NYSE:GLW) for up to $3.2 billion.

Analysts Question Nvidia Strategy

Some analysts, however, including those at Goldman Sachs, have expressed concerns about Nvidia’s investment strategy. They argue that the company’s equity financing to customers resembles “circular revenue,” where investments flow out as funding and returns are realized through GPU sales, thereby inflating growth.

Matthew Bryson from Wedbush also said that Nvidia's investments and infrastructure expansion align with the "circular investment" concerns weighing on the market, but he believes the strategy strengthens the company's long-term vision and could build a strong competitive moat if executed successfully, reported CNBC.

Meanwhile, earlier this year, CoreWeave Inc. (NASDAQ:CRWV) CEO Michael Intrator dismissed claims of "circular financing" with Nvidia as "ridiculous" and mathematically flawed, arguing that Nvidia's minority stake in the cloud provider is insignificant relative to CoreWeave's large capital base.

Benzinga's Edge Rankings place Nvidia in the 98th percentile for growth and the 97th percentile for quality, reflecting its strong performance in both areas. Benzinga’s screener allows you to compare Nvidia’s performance with its peers.  

NVDA Price Action: On a year-to-date basis, Nvidia stock surged 15.40%, as per data from Benzinga Pro.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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