Nvidia stock drops nearly 5% on circular financing fears
Nvidia stock tumbled nearly 5% on Monday, leading chip shares lower after reports it may backstop $250 billion in OpenAI data-center funding. The sell-off revived circular financing worries and briefly left Apple as the world's most valuable public company, per Yahoo Finance.
Key Takeaways
- Nvidia (NVDA) closed down nearly 5% on Monday, July 27, 2026, at $196.51, according to Yahoo Finance.
- Reports of a potential $250 billion OpenAI computing lease backstop renewed "circular" financing concerns.
- AMD fell more than 5%, while Micron and SK Hynix dropped more than 2% and 7%, respectively.
- Apple overtook Nvidia as the world's most valuable public company after the pullback.
- Investors are watching Microsoft, Amazon, and Meta earnings for fresh AI spending signals this week.
Why did Nvidia stock fall so sharply on Monday?
According to Yahoo Finance, Nvidia shares tumbled nearly 5% as sellers hit the AI chip leader and the broader semiconductor group. Peer AMD declined more than 5%. Memory names also sold off, with Micron down more than 2% and SK Hynix plunging more than 7%.
The move followed reports that Nvidia is in talks to backstop $250 billion in funding for OpenAI to lease computing power tied to a U.S. data center project. Bloomberg, cited by Yahoo Finance, said the potential guarantee would be among the largest of its kind for the chipmaker.
That news landed as investors already fretted about AI infrastructure returns. For more market and tech alerts, see our Streaming & TV Alerts hub.
What is circular financing, and why does it matter for Nvidia stock?
Circular financing describes a setup in which suppliers are also major investors in their customers. Yahoo Finance reported that a chipmaker such as Nvidia helping fund an AI developer that buys its equipment renews doubts about demand strength, AI valuations, and rising debt.
Bloomberg also noted that the cost of protecting Nvidia's debt against default for five years rose by the most on record Monday. That jump fed fears of expanding funding commitments around AI buildouts.
Separately, Nvidia announced a strategic collaboration on Friday with SK Group, parent of SK Hynix, for a $500 billion-plus initiative spanning AI factories and next-generation memory. The scale of those partnerships is fueling both excitement and skepticism.
What else pressured chip stocks, and what comes next?
Yahoo Finance said concerns that China may be winning the AI race also weighed on the sector. The Information reported that a Chinese state-backed company began mass-producing a key piece of chipmaking equipment, helping spark a sell-off in ASML shares.
Last week, Alphabet shares plummeted after the company raised its capital spending outlook for AI infrastructure. Investors are now awaiting earnings from Microsoft, Amazon, and Meta, all expected to signal further AI-related spending. Any hint of a slowdown could spell trouble for semiconductor and equipment makers.
For now, the near-term story for Nvidia stock is clear: circular financing headlines, sector-wide risk-off trading, and a close watch on Big Tech capex guidance.