A new Wall Street Journal report alleges that Nvidia deliberately inflated the perception of a GPU shortage by investing in AI startups that would then turn around and buy Nvidia's chips — an accusation that lands on the chipmaker at the most delicate moment in its history, less than a week after co-founder Jensen Huang resigned as CEO.
According to the report, summarized this week by TechPowerUp and Wccftech, Nvidia invested in AI startups that went on to purchase Nvidia GPUs and build data centers with them, in an effort to maintain the appearance of ongoing high demand and to move an oversupply of semiconductors queued up at TSMC. The Journal's reporting describes a company on the hook for what one internal account called an avalanche of GPUs — silicon with no immediate buyers. For more reporting like this and the latest AI industry coverage, we are following the fallout as regulators and investors dig into the details.
Inside the August Meeting: Kress Versus Huang
The report centers on an August meeting between Huang and his senior finance team, including Chief Financial Officer Colette Kress — who was named interim CEO following Huang's resignation last Thursday. Per the Journal's account, Kress pushed to reduce Nvidia's so-called circular financing agreements, and to scale back the company's enormous $250 billion deal with OpenAI.
Huang's response, according to the report, was not receptive. The Journal reports that Huang lay into Kress, calling her a "deer in the headlights" after she pressed to scale back the OpenAI commitment. The exchange, as described, captures the central tension inside Nvidia during its final months under Huang: a finance team increasingly worried that the company's web of investments in its own customers was building risk on top of risk, and a founder-CEO determined to keep demand — and the story of demand — at full throttle.
What Circular Financing Means for the GPU Market
Circular financing is the practice of a vendor investing in its own customers, who then spend that capital on the vendor's products. In Nvidia's case, that has meant equity stakes and investments in AI companies, data-center developers, and small-scale cloud providers — the so-called neoclouds — that then buy Nvidia systems. The practice has drawn skepticism from analysts for months, since it simultaneously boosts reported demand for Nvidia's chips and concentrates exposure to a narrow slice of the AI ecosystem whose business models remain unproven.
The Journal's reporting adds a sharper allegation on top of that structural concern: that the investments were aimed, at least in part, at sustaining the appearance of scarcity. The report describes hyperscalers — the largest cloud companies — shifting away from off-the-shelf Nvidia components toward their own custom silicon, leaving Nvidia facing the oversupply problem at TSMC. Investment in smaller cloud providers, in this telling, kept chips moving. But the report also notes that Kress flagged the flip side: many of these small-scale providers could not actually afford to buy the GPUs, meaning Nvidia's own investments could become a financial dead end.
A New Report Piles Onto a Leadership Vacuum
The allegations arrive as Nvidia navigates its first full week without Huang at the helm. The chief executive resigned effective immediately on November 12, ending a 33-year run, amid a separate scandal involving an alleged personal relationship that raised national-security concerns and prompted an independent board investigation. Kress, the company's longtime CFO, stepped in as interim CEO while the board searches for a permanent successor.
The Journal has followed up with further reporting this week on how Nvidia's startup ecosystem is reacting, describing AI startup founders fretting as their champion departs the company. The new circular-financing allegations add a business-conduct dimension to what had so far been a personal-conduct crisis — and they will almost certainly feature in the board's ongoing review, in shareholder litigation that has already been filed, and in the scrutiny of lawmakers who have summoned Nvidia leadership to Capitol Hill briefings in recent weeks.
What It Means for the AI Supply Chain
If the reporting is accurate, it reframes the shortages that have defined the AI buildout for two years. Memory capacity for 2027 is reportedly sold out, GPU prices have climbed, and AI server costs have risen — conditions that have squeezed everyone from consumer GPU buyers to hyperscale data-center operators. The suggestion that scarcity was, in part, a managed perception rather than a purely organic phenomenon cuts against the narrative that carried Nvidia to what was briefly the world's largest market capitalization.
It also feeds a broader investor reassessment of AI infrastructure debt and vendor-financed demand. Short-sellers have openly bet against the circular-financing dynamic, credit analysts have stress-tested neocloud borrowers, and financial regulators have flagged AI concentration risk in the financial system. A WSJ report alleging that the largest chipmaker in the world leaned on its balance sheet to sustain demand optics gives each of those threads a concrete, documented anchor — and gives Nvidia's critics their most detailed account yet of how the machine worked from the inside.
Nvidia, now under interim leadership, has not publicly detailed its response to the report's specific allegations. What happens next — whether the board's investigation expands, whether regulators pick up the thread, and whether Kress executes the financing pullback she reportedly championed in August — will shape not just Nvidia's next chapter, but the financing logic of the entire AI buildout.
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