Nvidia (NVDA) shares closed comfortably in the green on Monday after the artificial intelligence (AI) behemoth announced a $2 billion stake in the California-based Synopsys (SNPS).
Jensen Huang, its chief executive, dubbed the strategic alliance “a huge deal” in a CNBC interview todaym even calling the Nasdaq-listed firm a foundational partner in semiconductor innovation.
At the time of writing, Nvidia stock is up roughly 105% versus its year-to-date low in early April.
Despite a positive initial reaction, the NVDA investment raises significant concerns about circular financing within the AI ecosystem.
Critics argue that Nvidia may be artificially inflating demand by investing aggressively in suppliers and customers who subsequently purchase more of its chips.
In fact, short sellers including Michael Burry are betting against NVDA shares due to this narrative, likening them to Cisco Systems (CSCO) during the dot-com bubble.
The “Big Short” investor recently warned of a potential “capex apocalypse” as hyperscalers extend GPU depreciation schedules to four years even though Nvidia has a 12-18 month product refresh cycle.
The Synopsys partnership arguably positions Nvidia to capitalize on up to $4 trillion in projected AI infrastructure spending through 2030.
Still, Jay Goldberg – a senior Seaport Research analyst – continues to rate the AI stock at “Sell,” citing a complex sales structure and $26 billion in prepaid cloud compute costs on the firm’s balance sheet.
According to him, the multinational has been “leaning on a variety of sales mechanisms” to address the rapidly growing competitive pressure.
“These measures are not fully reflected in financials, but they are already material and look likely to grow significantly next year,” which may make it increasingly difficult for Nvidia shares to push higher in 2026, he told clients in a research note today.
Other Wall Street analysts, however, do not agree with Goldberg’s bearish view on NVDA stock.
The consensus rating on Nvidia shares remains at “Strong Buy” with the mean target of about $253 indicating potential upside of another 40% from current levels.