Renowned investor takes direct aim at NVIDIA: The excessive AI boom is completely dependent on it.

Two Wall Street titans, Mark Cuban and Michael Burry, have just issued a warning about Nvidia's massive artificial intelligence (AI) ecosystem network.

Previously, a user posted on social media platform X expressing concerns that Nvidia has acted as a "backstop" by funding customers to buy its GPUs for data center construction, making itself vulnerable to a "recession" in the AI boom. Later, Cuban, the American billionaire investor, echoed similar concerns.

He posted on X writing: "This is very similar to the bursting of the dot-com bubble. But unlike the large number of IPOs back then, Nvidia itself is the 'IPO' that funds everyone."

Cuban was referring to a prevalent phenomenon during the dot-com bubble, where startups went public to raise capital and secure high valuations. He also stated that during this current tech boom, Nvidia has replaced the stock market to take on that role.

"A breakthrough by other chip suppliers, or a single misstep, could cause the entire system to collapse," he wrote on X. "This is really terrifying."

His comments came as Nvidia has struck hundreds of billions of dollars worth of deals with numerous players across the AI ecosystem, including OpenAI, Microsoft, CoreWeave and SK Hynix. Cuban fears that the chipmaker is so closely tied to its customers that if something goes wrong, the damage could spread rapidly, leading to painful and widespread consequences.

Nvidia CEO Jensen Huang himself acknowledged Nvidia's critical role at a company meeting last November, noting that there are countless memes online about the company propping up the AI boom, the stock market and the global economy.

"We are basically holding up the planet — that's not untrue," Huang said. Nvidia's stock price fell more than 3% on Wednesday, and is almost flat so far this year.

It is not a unique case. Burry, the well-known short-selling investor known as "Big Short", has also issued a similar warning.

"There is a reason why the price of Nvidia's 5-year credit default swap (CDS) is rising parabolically," he wrote, attaching a chart showing that the price of buying default insurance for Nvidia's debt has roughly doubled over the past two months.

"Nvidia is so overstretched that it has pushed circular spending to an epic scale," he added, suggesting that the market is pricing in greater risk that Nvidia cannot meet its financial commitments after overextending its footprint through too many deals.

In recent weeks, both Cuban and Burry have criticized certain aspects of the AI boom.

Cuban warned in a podcast that enterprises are overbuilding AI infrastructure that will become far more efficient over time, leading to excess capacity. He joked that many of these facilities will eventually be converted into pickleball courts.

Similarly, Burry said that tech giants are overinvesting in microchips and data centers that will soon become obsolete, delaying depreciation to inflate their earnings, and signing "mutually beneficial" deals to keep the AI hype going.

Burry also wrote in a post on July 24 that he increased his short position in Nvidia and holds "a considerable amount of" put options. He believes that most of Nvidia's demand does not come from end customers, but is realized through financing that is not recorded on its balance sheet. He wrote, "Most of the future revenue is obtained through circular financing."

This article is from the WeChat Official Account "Sci-Tech Innovation Board Daily", written by Huang Junzhi, and published by 36Kr with authorization.