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Jeffrey Gundlach questions Nvidia’s debt plan for AI chip funding
Gundlach argues the proposal ties long-dated borrowing to Nvidia GPUs that could lose value as product refresh cycles take 18 to 24 months.
Jeffrey Gundlach, the so-called “bond king,” criticized Nvidia’s plan to use GPUs as collateral in long-term debt deals aimed at funding AI data center infrastructure and chip purchases. In a post highlighted by Yahoo Finance, he said the setup involves major private credit and asset management firms including Apollo, BlackRock, Blackstone, KKR, and Goldman Sachs.
The critique centers on what Gundlach calls a “duration and depreciation mismatch.” He argues that Nvidia’s GPU refresh cycles typically run about 18 months to 24 months, meaning long-dated debt could be backed by hardware that becomes technologically obsolete, or materially less valuable, within a few years.
Gundlach also raised concerns about how market tops often do not arrive with clear warning signs, instead reflecting “financial innovation” that he views as relying on ratings to repackage speculative technology capital spending into a pseudo-safe asset category.
Yahoo Finance further notes that Gundlach compared securitizing GPUs to issuing a 30-year bond backed by “warehouses of newly engineered bananas,” a reference to the risk that the collateral may “spoil” before the debt term ends.