{"id":788025,"date":"2026-07-27T21:29:29","date_gmt":"2026-07-27T21:29:29","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/788025\/"},"modified":"2026-07-27T21:29:29","modified_gmt":"2026-07-27T21:29:29","slug":"nvidia-drops-nearly-5-leading-chip-stocks-lower-amid-renewed-worries-of-circular-financing","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/788025\/","title":{"rendered":"Nvidia drops nearly 5%, leading chip stocks lower amid renewed worries of circular financing"},"content":{"rendered":"\n

What happened: Nvidia (NVDA<\/a>) stock tumbled nearly 5% on Monday, weighing on the rest of the chip sector. As a result of the pullback, Apple (AAPL<\/a>) surpassed Nvidia as the world’s most valuable public company. <\/p>\n

Peer chipmaker AMD (AMD<\/a>) also declined more than 5% on Monday, and memory makers plunged, with Micron (MU<\/a>) and SK Hynix (SKHY<\/a>) dropping more than 2% and 7%, respectively. <\/p>\n

What’s behind the move: Reports<\/a> that the company is in talks to backstop $250 billion in funding for\u00a0OpenAI (OPAI.PVT<\/a>) to lease computing power related to a US data center project have renewed concerns about\u00a0“circular” financing<\/a>, an arrangement in which suppliers are also major investors in their customers. <\/p>\n

The potential guarantee would be one of the largest of its kind for the chipmaker, according to Bloomberg. <\/p>\n

The AI chipmaker also announced a strategic collaboration<\/a> with the conglomerate SK Group, the parent company of SK Hynix (SKHY<\/a>), on Friday for a $500 billion-plus initiative spanning AI factories and next-generation memory. <\/p>\n

At the same time, concerns that China may be winning the AI race are putting pressure on the sector.\u00a0The Information\u00a0reported that a Chinese state-backed company began mass-producing a key piece of chipmaking equipment, sparking a sell-off in ASML (ASML<\/a>) shares. <\/p>\n

What else you need to know:\u00a0Worries of circular investments between a chipmaker like Nvidia and the AI developer that buys its equipment only add concerns about demand, AI valuations, and debt. <\/p>\n

Bloomberg noted the price of protecting Nvidia’s debt<\/a> against default for five years rose by the most on record on Monday, stoking fears of rising funding commitments. <\/p>\n

\"FILE<\/a> Nvidia CEO Jensen Huang speaks during a doorstep after attending the AI Ecosystem Reception in Tokyo, Japan, July 16, 2026. REUTERS\/Manami Yamada\/File Photo \u00b7 REUTERS \/ REUTERS <\/p>\n

Investors have also grown increasingly jittery over AI infrastructure spending, calling into question their return on investment. <\/p>\n

Last week, Alphabet\u00a0(GOOG<\/a>,\u00a0GOOGL<\/a>) shares plummeted after the tech giant announced it would raise its capital spending outlook as it builds out its AI infrastructure. <\/p>\n

Investors are now awaiting earnings this week from Microsoft (MSFT<\/a>), Amazon (AMZN<\/a>), and Meta (META<\/a>), all of which are expected to announce further increases in AI-related spending. <\/p>\n

Any hint of a slowdown, however, would spell trouble for the companies that make semiconductors and related equipment. <\/p>\n

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre<\/a>. <\/p>\n

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