# NVIDIA Systemic Risk and AI Market Concentration

**Podcast:** Prof G Markets
**Published:** 2026-10-13

## Transcript

Support for the show comes from Engin.
Every year, $1.6 trillion moves through travel.
Most of it still runs on technology built decades ago.
It works, it's just not intelligent.
Engin spent the last eight years building the foundation that intelligent travel requires.
Robust inventory, hotel relationships, pricing intelligence, and payment rails.
The unglamorous infrastructure work that simply can't be bought.
Today, that foundation runs travel for nearly 40,000 businesses and 2 million travelers, and it's growing 60% a year.
Intelligent Travel, the future of business travel, runs on Engine.
Learn more at engine.com slash propg.
As soon as autumn rolls around and you swap your iced lattes for pumpkin spice, that's your signal to start thinking about the holidays.
The decor, the gifts, the shopping lists, but more importantly, the holiday treats.
Cheesecakes, cookies.
Is there anything better?
And when the recipe calls for cream cheese, there's only one option.
Philadelphia, the original cream cheese made with fresh milk and real cream.
This holiday season, whether you're going all out or keeping it simple, make it really Philly good.
Find your favorite holiday recipe at creamcheese.com.
At Talbot's, we believe great style should simplify your life, not complicate it.
That's why we create timeless, effortless pieces designed to be worn, loved, repeated, and lived in.
The trusted favorites that become part of your story.
The classics that always look right and help you feel like your most confident self.
Because when you know what works for you, you spend less time getting dressed and more time living beautifully.
Discover the pieces you'll reach for again and again.
Shop Talbots.com slash I-N-A today.
If money is evil, then that building is hell.
The show goes on!
Welcome to Prof G Markets.
I'm Ed Elson.
It is October 13th.
Let's check in on yesterday's market vitals.
The S&P and the Nasdaq declined, weighed down by semiconductor stocks.
Meanwhile, the Dow rose.
Brent crude climbed above $106 per barrel after President Trump announced an energy ceasefire between Russia and Ukraine.
More on that later.
And finally, Treasury futures were stable with the US bond market closed for the holiday.
And by the way, we've been nominated for three Signal Awards.
So if you like the show, please head to vote.signalaward.com.
Cast your ballots for us in each of these three categories.
Best video podcast, best daily podcast, and best money and finance podcast.
Every vote counts.
We will leave a link in the description to make it easier for you.
Thank you so much.
Okay.
What else is happening?
NVIDIA isn't just the AI boom's supplier anymore.
It is also its investor, buyer, and guarantor.
Reports emerged over the weekend that NVIDIA is in talks to buy its customer Reflection AI and its competitor Dmatrix.
At this point, NVIDIA has equity stakes in 13 public companies and 229 private companies across the AI ecosystem.
It's also guaranteed more than $108 billion worth of data center leases.
As NVIDIA inches closer to a $6 trillion market cap and the AI boom hits a fever pitch, the question becomes, is NVIDIA too big to fail?
Joining us to discuss this question, we are speaking with Liz Hoffman, business editor at Semaphore.
Liz, welcome back to the show.
This was prompted, this question that we are asking was prompted by...
your newsletter, you brought this up.
You pointed out just how much, how many private companies NVIDIA owns and the $50 billion worth of those private companies that it owns, as well as all of its stock in public companies.
And you brought up this question, is it too big to fail at this point?
Talk a little bit more about why you're asking that question and why it's relevant to the AI boom.
I'm not just asking it.
I am answering it.
I think the answer is clearly yes.
You know, you went through all the numbers there, and we can poke at each of them and why they are both enormous and probably bigger sort of emotionally than they even look on paper.
But to me, the simplest way to decide if a company is too big to fail is to ask, would the government step in to save it if it were in trouble?
And I do not think the government would step in to save Meta or Google.
I do think they would step in to save NVIDIA and with some pretty good reasons.
So, look, I covered banks after the 2008 crisis when they were going through that reckoning.
And it looks a lot like the big banks to me.
It is just too important and it's in too many places doing too many things to be allowed to fail.
Do you think that that is part of the strategy to become entrenched, so entrenched in the system to invest in so many companies, become so systemic that you become almost impenetrable?
I mean, it seems like that might have been part of the banking strategy themselves.
There is a lot of that going around, particularly with the way that the AI companies were talking about.
Please slow us down, right?
The dark underbelly of that is we need some implicit government backstop.
And the way to do that is to kind of pull the mode up behind us.
And I've always said the thing about the big banks post-2008 was you actually, you could at that time get all of the risk in a room.
The Fed could say, we want your CEOs down here.
We're going to tell you exactly how this is going to go.
And clearly that is kind of where the AI oligopoly is right now.
I'm not really sure that's what...
Jensen Wong and NVIDIA is up to him, and he clearly believes in this stuff.
He's been a pretty thoughtful critic of the closed models and the frontier labs, and he's been very dismissive of the idea that they need the government to stop them.
His view is that this is software and run it like a product, like you would anything else, and consumer protection is important and all of that.
But the upshot is that he has made his company too central to the entire ecosystem to be allowed to go under.
Not that I think this is not a commentary on NVIDIA's financial health.
They actually have a very strong balance sheet relative to all the other players.
It's just sort of a theoretical exercise, and it's just obvious to me that they are too big to fail.
Yeah, you described the company as an AI roll-up machine.
just pointing out how many investments they have made.
What do you make of that strategy?
I mean, they are, of course, producing the GPUs, designing the GPUs.
But, you know, it is pretty remarkable how they've become something of an investment firm.
They're almost becoming like an AI holding company.
What does that mean for investors?
Because now when you invest in NVIDIA, you're not just investing in a chip company, you're investing in a lot of ways in almost like a...
an investment firm, an asset management firm.
What do you make of that strategy?
Yeah, it's a pretty handy package.
If you're an investor saying, I kind of want all of it.
Pretty easy way to do it, which is perhaps why 8 cents of every dollar that's in the S&P 500 right now is in NVIDIA.
You're talking about, that's by the way, 20 to 25 trillion dollars of invested money between the straight index funds and the shadow indexers.
So that's an awful lot of money.
I mean, look, they've done kind of two things that have always existed.
Customer finance, right?
The vendor is providing the financing for a customer.
Ford does this all the time.
Ford Motor Credit will give you a loan to buy a Ford car because they want you to buy a Ford car.
That's one.
And the other is what's called credit enhancement.
But you have all of these money-losing AI startups that need to buy compute, need to buy chips, and they can't quite—you can think about it like your parents co-signing on your first apartment.
They have done both of those, but they've done it at a massive, massive scale.
So they've interjected, they've basically stood in as the counterparty because they are, I think, they're investment grade, very blue chip company, and have stood in for their customers that are not.
And then you could say, okay, well, maybe that's fine, but there's a reason that we like to have creditworthy counterparts.
And that kind of wrapping that up in some cloak almost certainly is going to have some springs fly loose at some point.
Yeah, you mentioned that their balance sheet is especially strong.
or at least it is strong.
I mean, if we're looking at something breaking in the AI trade, NVIDIA probably looks more secure than a lot of other companies.
But I guess the question is now becoming, you know, how likely is it that something might break?
And we are seeing a lot of talk, a lot of reporting about a bubble somewhere in AI land, potentially among the data centers, of course.
One of their investments, Firmus, which is a data center company, they were supposed to go public.
That IPO was pulled.
We're seeing a lot of these other companies that are in AI that are pulling their IPOs or at least pausing them or delaying them.
Broadcom's CEO just made an equivalency between the AI trade and casinos, saying that it's become kind of like a casino.
I mean, what are your thoughts on the sustainability?
of this AI build-out and the extent to which NVIDIA is either exposed or protected.
I think this is incredible technology and it's clearly going to rewire the economy in lots of interesting and mostly positive ways.
It's my view.
I have no idea when that's going to happen.
But you've got to think there's investment horizons that are shorter than eternity.
And so, I mean, I think it's helpful to say, okay, well, like, how could this go sideways?
Right.
And it's worth remembering we were comparing NVIDIA to the big banks, but they actually look in some ways a lot more like AIG in the role that AIG was playing.
They were not a bank, but they were providing insurance for all of these things.
They had their tentacles into everything.
And ultimately, AIG's problem was that the stuff that it was holding was not as good as it thought it was.
And so you saw these things get marked down.
They had to start selling like, you know, NVIDIA owns a big stake in Intel.
fine investment.
But if something goes wrong in their other businesses and they say, oh, like, we need some cash, they're going to sell the thing that they can sell.
And a really bad headline would be NVIDIA sells its stake in Intel.
It would spook everybody.
So you have to sort of think about the second order effects of these things.
As you said, they have a very strong balance sheet.
They don't carry a lot of debt relative to the other big players in the space.
They actually just announced an $150 billion buyback, stock buyback, last week, I think, which...
ITUK is more of a flex than anything else.
We can afford to do this rather than they don't need to buy back their stock.
Their stock price is very high.
This is not a signal to investor.
It's actually a flex to the entire market, saying other big companies are having to choose between buying back their stock and participating in the AI trade.
We don't have to.
We're just that strong.
So, you know, you got to look at the messaging here, too.
The company that we have been wondering if they will eventually become too big to fail is OpenAI.
And we were especially asking that question.
after it seemed like they were in talks with the government or there were rumors that they might be talking to the government about some sort of relationship.
That didn't seem to materialize, but that's something that has been on the table.
Do you think that OpenAI is one of those companies that also might be too big to fail?
Or if something goes wrong, would the government let them collapse?
The caveat that this is not a normal government.
They don't behave the way normal governments do when deciding how to interact with private enterprise.
So I don't know.
You know, what I wrote was that NVIDIA has become both a bank, a financial supporter, and a security blanket for the entire industry.
There's an emotional piece to this, too.
From, like, a product standpoint, if OpenAI went away tomorrow, like, we would all use a different thing.
And I'm sure that the, you know, the access to compute that they have been contracting and tied up, someone else would say, yeah, we'd love to have that.
So I don't think that's the issue.
It would obviously be incredibly emotionally.
scarring and would almost certainly freak everyone out in the market would go down and then you might start to see some things unravel.
I wouldn't put them in that bucket, though.
They're just not entwined in the ecosystem in as many ways as NVIDIA is.
Nobody is.
Liz Hoffman is business editor at Semaphore.
Liz, we always appreciate your time.
Thank you.
Thanks, Ed.
After the break, a look ahead at earnings season.
And a reminder to please vote for us at Signal Awards.
Go to vote.signalaward.com.
We really appreciate it.
Support for the show comes from Engine.
When 1.6 trillion moves through travel every year, it's a shock to remember that most of it still runs on tech from the 80s.
I mean, work travel works fine, but it certainly isn't all that intelligent.
That's why businesses and travelers book directly through Engine.
Engine closes the gap between wanting to be somewhere and actually being there.
developers, expense tools, and AI agents all plug into Engin's API.
And as AI spreads, Engin only becomes more valuable.
Every AI agent that wants to book travel needs real supply, real pricing, and real payments.
With 40,000 businesses relying on Engin and growing fast, they're powering travel for the masses with partnerships like Navon and the Tampa Bay Buccaneers.
Strong hotel partnerships, proprietary supply, real-time rate shopping, and payment rails.
That's the kind of foundation that takes years to build, eight years in Engin's case.
and it can't be bought.
The future of business travel runs on Engine.
Visit engine.com slash prop G.
Support for the show comes from Alpha Space by Yahoo Finance.
Instead of bouncing between countless tools and tabs to manage your portfolio, Alpha Space by Yahoo Finance brings your entire investment workflow into one easy-to-use platform.
With advanced charting, market data, in-depth Yahoo Finance news, and AI assistance all-in-one experience, it makes it easier to understand the markets and to make informed decisions.
Alpha Space by Yahoo Finance utilizes a Yahoo Scout powered assistant to build a personalized view around exactly what you want to analyze, then syncs it with your portfolio for real-time tracking.
You can compare multiple tickers, explore everything from candlesticks and line charts to fundamental data and layer in indicators like moving averages, Bollinger Bands, RSI, MACD, and more.
So I'm in that space in between what I'd call your standard retail investor and a hedge fund manager.
I think a lot about stocks.
I spend a lot of time managing my money.
I advise hedge funds.
This suits me perfectly.
I want something more robust, better charting, that's AI enabled, that I can ask questions, that I can create baskets of stocks to track.
And it has the same intuitive visual feel that I really like from Yahoo.
You can explore Alphaspace with 50% off your first year of Yahoo Finance Gold at yahoofinance.com slash prop g.
That's yahoofinance.com slash prop g.
Billed is $239.70 for the first year, then $479.40 thereafter.
Offer valid for new subscribers in the U.S.
Cancel anytime.
Offer ends December 31st, 2026.
At Talbots, we believe great style should simplify your life, not complicate it.
That's why we create timeless, effortless pieces designed to be worn, loved, repeated, and lived in.
The trusted favorites that become part of your story.
The classics that always look right and help you feel like your most confident self.
Because when you know what works for you, you spend less time getting dressed and more time living beautifully.
Discover the pieces you'll reach for again and again.
Shop Talbots.com slash I-N-A today.
We're back with Prof G Markets.
Earnings season is kicking off this week and expectations are high.
Analysts are expecting S&P 500 profits to grow almost 30% this quarter.
Meanwhile, the S&P itself is coming off of a fresh record high, which was set last week.
But the market also has some things to be concerned about.
Bank stocks are down about 7.5% over the past month.
The Fed is expected to cut rates again before the end of the year, and consumer sentiment is nearing a record low.
So here to discuss...
earnings ahead of them.
We're speaking with James Taylor, Managing Director of Investments at the Taylor Group from Wells Fargo Advisors.
So, James, thank you for joining us.
Earnings season starts on Tuesday.
Analysts are expecting S&P profits to grow almost 30%, which is a pretty massive number.
Your reactions, your thoughts heading into this earnings season?
I'm not really worried about bad earnings.
I think their earnings are going to be very good.
I just don't know if they're going to be good enough to support current valuations.
I hope that's going to be the case.
I think the bank stocks are going to really give us a good preview into the consumer as well as how they are doing overall.
They've definitely struggled, as you mentioned.
XLF essentially is flat for the year.
So I think it's probably, I'd make the argument, it's probably the most important quarter.
from an earnings perspective, given that we had a rate hike, they're predicting another rate hike going into the end of the year.
So I'm really curious to see how the banks report and then go from there.
Yeah, this brings us to the breadth of this market.
And it seemed like we had a pretty broad and diversified market up until basically halfway through the year.
And then suddenly, basically after the summer, you have tech really leading all of the gains, four stocks accounting for half of the S&P's gains this year, Apple, NVIDIA, Micron, and AMD.
How concerned are you about the fact that AI is, that this market has become so heavily dependent on AI that it is so concentrated in fewer and fewer names?
I am concerned.
I think that...
You know, a few years back, if you invest in any company that was spending in AI, you were fine.
That worked out really well, kind of across the board.
Now I think you have to be a lot pickier.
I think investors are looking at these different companies and they want to see that there's actually a return on that spend.
And that's going to show up in earnings.
So it's definitely something that I'm looking at.
I'd feel a lot more comfortable if that breadth got increased pretty significantly across the board.
And I said, I think this is probably the most important earnings season.
going into the end of the year.
Just looking at yields here, the 10-year yield is at 5.24%.
It's come down a little bit, but still pretty high.
The 30-year yield is at 5.6%.
What are your expectations for bonds over the next several months?
If you told me coming into this year that we would be at a 24-year high with bond yields and the market would still be up in the teens, I'd call you crazy.
I think that's just a testament to, one, the consumer being really good, two, earnings being really good.
And it's been an unbelievable year for these companies from an earnings perspective.
We knocked the cover off the ball last quarter.
I do think it's going to be similar.
For bonds, I do think that you saw the re-hike a few weeks ago or last month.
They kind of shrugged it off, the market did, for that matter.
I do think that bonds are starting to look a lot more attractive now.
on the municipal side, on the treasury side.
So I really base everything off of, for us personally, our clients' financial plans.
So if I'm a conservative investor, I'm licking my chops.
I'm going out and buying these individual bonds across the board.
But if I'm a more aggressive investor, I like equities.
I think that there's a lot of good opportunities out there that we can take advantage of.
And if there's a sell-off in the market, we could buy names even cheaper.
So do you think this is really the buying opportunity in bonds right now?
Because, I mean, This isn't something that has been a particularly sexy investment over the past few years, but it feels like maybe now is the moment for Barnes once again.
I mean, a 24-year high, right?
We have been seeing this for such a long period of time.
So I think if you are not an aggressive investor and you're between conservative and moderately aggressive, why not be adding bonds?
It's going to lower the overall risk of the portfolio.
Your principal is guaranteed by the U.S.
government or the municipality that you're investing in.
And on the municipal bond side, you're getting tax-free income.
A tax equivalent yield is looking pretty attractive.
So I'm not against it.
I think this is the first time in a long time that I've said, hey, like maybe we should be taking a look at these because I do think they're very attractive.
And I don't know how long it's going to stay here.
You know, I do think if yields stay elevated for a longer period of time, you know, equities will probably suffer as a result of that.
So I don't think this is going to be like, you know, a one or two year thing.
I could be completely wrong about that.
But I would strike when the iron's hot if it makes sense for your individual portfolio.
Midterms are three weeks from tomorrow.
To what extent do you think the midterms will impact the markets?
Will they have positive impact, negative impact, or will it not really influence things at all?
Honestly, I think that certainty is a good thing, right?
I think that right now everyone's going into the midterm elections.
We don't know who's going to win.
Is there going to be a sweep on the Republican side?
Is there going to be a sweep on the Democratic side?
I don't know.
I really don't.
And I think that if you start to look at all these polls, you know, the polls have been wrong in the past.
We have seen that.
I think that it could be a positive catalyst going into the end of the year just because of market-like certainty.
So once we kind of get that off our backs, I think it could be like a positive, you know, catalyst, like I said, going into the end of the year once we figure that out.
Just to wrap here, do you have any thoughts on where the S&P will finish this year?
I mean, we're in...
double digits.
It's been pretty good.
Do you think that it'll stay that way?
I've stuck to my guns.
Even when the market was selling off at the end of July, everyone thought it was Armageddon.
I thought it was a really good buying opportunity.
We were right about that.
I do think we could get to the S&P 8,000 before the end of the year.
Again, that's my opinion.
I don't want to speak for my company as a whole, but I do think it's absolutely possible, especially on the back of strong earnings.
Okay, James Taylor is Managing Director at the Taylor Group from Wells Fargo Advisors.
James, we really appreciate your time.
Thank you.
Thank you for having me.
Have a good one.
President Trump has decided to make a deal with the devil.
On Friday, he announced that he and Vladimir Putin had agreed for Russia to sell up to 300,000 tons of diesel.
The deal was designed to help get diesel prices down, which had risen to $6.28 per gallon, and it worked a little bit.
Futures fail about 5%.
However, they still remain incredibly high.
The price of diesel in the U.S.
is still up about 70% since the U.S.
launched its war on Iran.
The move was heavily criticized by President Zelensky of Ukraine, who called it a, quote, weak decision.
He also added that making concessions for President Putin would, quote, not bring peace or any benefit to the civilized world.
In sum, he and Ukraine see this as...
a betrayal.
And let's be very clear, it is.
And we know that because right after Trump announced this deal and this energy ceasefire, Russia then launched another round of missile strikes onto Ukraine.
In other words, Russia has essentially received America's blessing to keep doing what they're doing, which means that we will likely see thousands more Ukrainian deaths, as well as a continuation of the territorial expansion campaign that has turned millions of Ukrainians into refugees.
Now, this isn't really a hot take.
This is simply a recognition of what happens when you normalize a violent dictatorship.
We used to treat Putin as a pariah.
He didn't change at all.
And now suddenly we don't.
Now I guess it's all okay.
So why are we now allowing this?
Well, it's because we are now desperate.
The self-inflicted injuries of the tariffs and the war have resulted in some of the steepest price increases in years.
Inflation has outpaced wage growth for five straight months, meaning that Americans are now, on average, getting poorer.
And they are increasingly blaming this all on Trump.
The president's approval rating has fallen to 30%, which is the lowest reading of this term so far.
And with the midterms coming up, President Trump now has to scramble.
So this deal with Russia is his Hail Mary attempt to get gas prices down.
And in doing it, he is both betraying our ally and endorsing our enemy.
It is the perfect gift for one of the most evil dictators in the world.
And while America might reap the short-term reward of marginally lower diesel costs, you can be sure that over in Eastern Europe, millions will be paying the price.
Okay.
That's it for today.
This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer.
Our video editor is Brad Williams.
Our research team is Dan Chalon, Kristen O'Donoghue, and Mia Silverio.
And our social producer is Jake McPherson.
Thank you for listening to Prof G Markets from Prof G Media.
If you liked what you heard, give us a follow.
I'm Ed Elson.
I will see you tomorrow.
Support for the show comes from Engine.
Travel tech from the 80s got us this far, but it's about time someone rebuilt it for the modern era.
That's what Engin has done over the past eight years, building strong hotel partnerships, proprietary supply, real-time rate shopping, and payment rails.
The kind of infrastructure work that simply can't be bought.
Today, that foundation runs travel for nearly 40,000 businesses and 2 million travelers, and it's growing 60% a year.
Intelligent travel.
The future of business travel runs on Engin.
Learn more at Engin.com slash Prop G.
At Talbots, we believe great style should simplify your life, not complicate it.
That's why we create timeless, effortless pieces designed to be worn, loved, repeated, and lived in.
The trusted favorites that become part of your story.
The classics that always look right and help you feel like your most confident self.
Because when you know what works for you, you spend less time getting dressed and more time living beautifully.
Discover the pieces you'll reach for again and again.
Shop Talbots.com slash I-N-A today.
Support for today's episode comes from Delta, official airline of the National Women's Soccer League.
Traveling is basically magic.
It creates opportunities, it fosters understanding, it expands horizons, it connects people and communities to each other and to their own potential.
Those are the values that drive Delta.
With up to 5,500 daily Delta and Delta Connection flights to more than 300 destinations on six continents, Delta is committed to helping you explore your world.
Whatever gives you the travel bug, Delta is here to help you get there.
Visit Delta.com for more info.
Delta, wherever the journey takes you.