The Exchange The Bank of Nvidia, Metal Momentum and Freight's State 10/8/25
Oct 8, 2025
Dan Niles, the founder of Niles Investment Management, provides keen insights into the current market landscape. He explores Nvidia's strategy of lending to AI startups while questioning the sustainability of this circular demand. Niles discusses how potential Fed rate cuts could temporarily boost AI stocks yet warns of a future reckoning without revenue generation. He also touches on the recent surge in gold and silver prices and examines the concerning state of freight logistics ahead of the holidays.
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Nvidia As An AI Ecosystem Bank
- Nvidia is acting as lender, investor, supplier and customer to AI firms, creating circular demand for its GPUs.
- That structure risks propping hardware demand and creates chip-backed debt with contested depreciation cycles.
Easy Money Fuels Short-Term AI Rally
- Easy monetary policy and expected Fed cuts will likely fuel AI stock gains in the near term.
- A later shift to scrutiny will trigger a shakeout if cash generation doesn't materialize.
Capex Vs. AI-Native Revenue Mismatch
- Massive capex ($800B by five biggest spenders) far outstrips revenues from pure AI-native firms today.
- Infrastructure spending creates demand but requires eventual customer willingness to pay for the capacity.