Has Nvidia Become Too Big To Fail?

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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 D-Matrix. 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 Semafor. Liz, welcome back to the show. This question that we are asking was prompted by your newsletter. You brought this up. You pointed out just 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.

Liz Hoffman (4:06)

I'm not just asking it. I am answering it. I think the answer is clearly yes.

You went through all the numbers there, and we can poke at each of them and why they are both enormous and probably bigger 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.

Ed Elson (4:49)

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? It seems like that might have been part of the banking strategy themselves.