Veterans of ‘The Big Short’ trade—Steve Eisman, Vincent Daniel, and Porter Collins—warn that technology revenue relies on a fraction of buyers, producing risks for chip suppliers and hyperscalers funding the infrastructure. Assessing the massive shift in tech balance sheets to fund this boom, Collins admitted: “Yes, it scares me, right?”
The 70% Concentration Risk
Despite Nvidia Corp. (NASDAQ:NVDA) reporting revenue growth above 100%, Eisman highlighted a detail buried in the chipmaker’s financial filings. Citing Note 7 in Nvidia’s 10-Q, Eisman stated that “the top five direct customers of Nvidia accounted for 70% of accounts receivable in the quarter.”
This concentration extends to the cloud providers buying those chips. Eisman pointed to Wall Street reports indicating that “70% of hyperscaler AI revenue is from just Anthropic and OpenAI“. This dynamic accounts for an estimated 25% to 35% of total cloud revenue for the major providers.
The OpenAI Cash Bleed
According to Eisman, the financial health of these core AI customers remains precarious. He explained that while Anthropic demonstrated sequential revenue growth, OpenAI’s revenue grew by $1 billion over three months, while its costs surged by $3 billion. Eisman noted that OpenAI is “bleeding cash every single day.”
This dynamic alarms Eisman’s former partners. Daniel questioned the broader returns on invested capital, citing enterprise clients who have reduced query costs by 60% by utilizing open-source models instead of leading-edge providers.
Meanwhile, major tech companies have transitioned from generating cash flow to issuing debt and equity to fund capital expenditures. Looking at this trajectory, Daniel noted that history points to a “boom, bust, and then what we get are good cycles afterwards.”
Supply and Market Threats
Because AI startups require continuous capital, Collins predicts they will be forced to go public, introducing a flood of new stock supply. He argued that a surge of new equity is what historically “killed markets,” pointing to stock crashes in 1929 and 2000.
Ultimately, the investors concluded that the technology sector’s reliance on highly concentrated buyers remains a central vulnerability.
How Has NVDA Performed in 2026?
Price Action: At the last check, the NVDA stock was trading 0.54% higher in premarket trading on Tuesday. It was up 13.12% year-to-date, rising by 18.64% over the last year, and up 17.04% over the last six months. It closed 5.50% lower at $212.19 per share on Monday.
Benzinga’s Edge Stock Rankings indicate that NVDA maintains a strong price trend in the long and medium terms but a weak trend in the short term, with a poor value score.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo: FotoField / Shutterstock
Login to comment