Nvidia Corp. (NASDAQ:NVDA) CEO Jensen Huang said the company’s computing hardware is a “durable and highly rentable” asset, prompting short seller Jim Chanos to ask why the company doesn’t rent the chips directly to customers.
The Rental Debate
The exchange began on X when Huang responded to market data showing price increases for older artificial intelligence hardware. “NVIDIA compute is fungible, durable and highly rentable,” Huang wrote. “It is a productive, revenue-generating asset.”
Chanos directly challenged this premise in a reply to Huang. “Then why not rent them out yourself? Or simply keep raising prices? $NVDA,” Chanos wrote.
Huang’s comments were prompted by a post from Ornn Exchange noting that the rental price for Nvidia’s three-year-old H100 training chip had increased 22% in a month to $3.28 an hour. The increase challenges assumptions that older AI hardware necessarily loses economic value at a steady pace.
Depreciation and Accounting Risks
Chanos has previously criticized the accounting methods used by data center operators. He has argued that buyers like Oracle Corp. (NYSE:ORCL) and CoreWeave Inc. (NASDAQ:CRWV) rely on unrealistic six-year depreciation schedules for their hardware.
Chanos argues that the chips can become economically obsolete within three to four years. Adjusting depreciation schedules to reflect a shorter lifespan would drastically increase annual expenses and impact reported earnings, a situation Chanos characterized as a “massive financial risk.”
Hedge fund manager Michael Burry has echoed these concerns. Burry estimated that major cloud providers could understate depreciation by approximately $176 billion between 2026 and 2028 by extending the useful economic lives of their computing equipment.
Residual Value and Financing Strategy
Despite skepticism from short sellers, market data indicates that older hardware currently retains value. Silicon Data estimates the residual value of six-year-old Nvidia A100 chips remains near $5,000, as customers repurpose them for lower-cost workloads.
Nvidia continues its push to establish AI computing as an investable infrastructure class. The company recently partnered with financial institutions—including BlackRock, Blackstone, and Apollo Global Management—to mobilize over $500 billion in financing for data centers, a strategy heavily dependent on the sustained rental economics of its hardware.
How Has NVDA Performed in 2026?
Price Action: At the last check, the NVDA stock was trading 0.17% higher overnight. It was up 21.03% year-to-date, advancing by 34.12% over the last year, and rose 26.94% over the last six months. It closed 2.01% higher at $225.73 per share on Friday.
Benzinga’s Edge Stock Rankings indicate that NVDA maintains a strong price trend in the long, short, and medium terms, with a solid growth score.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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