Short seller Jim Chanos challenged Nvidia Corp. (NASDAQ: NVDA) CEO Jensen Huang over the rental economics of artificial intelligence chips, questioning why the company does not lease its own hardware.

Huang described Nvidia’s computing hardware as a "durable and highly rentable" asset, calling it a productive, revenue-generating resource. Chanos responded by asking why Nvidia does not rent the chips directly to customers or simply continue raising prices.

The Rental Debate

The exchange occurred after Huang responded to market data showing price increases for older AI hardware. Huang stated that Nvidia compute is fungible and durable.

Chanos directly challenged this premise in a reply to Huang. "Then why not rent them out yourself? Or simply keep raising prices? $NVDA," Chanos wrote.

Huang’s comments were prompted by a post from Ornn Exchange noting that the rental price for Nvidia’s three-year-old H100 training chip had increased 22% in a month to $3.28 an hour. This increase challenges assumptions that older AI hardware necessarily loses economic value at a steady pace.

Depreciation and Accounting Risks

Chanos has previously criticized the accounting methods used by data center operators. He argued that buyers like Oracle Corp. (NYSE: ORCL) and CoreWeave Inc. (NASDAQ: CRWV) rely on unrealistic six-year depreciation schedules for their hardware.

Chanos argues that the chips can become economically obsolete within three to four years. Adjusting depreciation schedules to reflect a shorter lifespan would drastically increase annual expenses and impact reported earnings, a situation Chanos characterized as a "massive financial risk."

Hedge fund manager Michael Burry echoed these concerns. Burry estimated that major cloud providers could understate depreciation by approximately $176 billion between 2026 and 2028 by extending the useful economic lives of their computing equipment.

Residual Value and Financing Strategy

Despite skepticism from short sellers, market data indicates that older hardware currently retains value. Silicon Data estimates the residual value of six-year-old Nvidia A100 chips remains near $5,000, as customers repurpose them for lower-cost workloads.

Nvidia continues its push to establish AI computing as an investable infrastructure class. The company recently partnered with financial institutions including BlackRock, Blackstone, and Apollo Global Management to mobilize over $500 billion in financing for data centers, a strategy heavily dependent on the sustained rental economics of its hardware.

Stock Performance

At the last check, the NVDA stock was trading 0.17% higher overnight. It was up 21.03% year-to-date, advancing by 34.12% over the last year, and rose 26.94% over the last six months. It closed 2.01% higher at $225.73 per share on Friday.

Benzinga’s Edge Stock Rankings indicate that NVDA maintains a strong price trend in the long, short, and medium terms, with a solid growth score.

NVIDIA Corp (NASDAQ: NVDA) shares fell 1.94% to $225.90 on Tuesday, underperforming the broader market despite strength in growth stocks. The decline occurred as investors rotated into defensive sectors, with utilities gaining 1.08%.

The Nasdaq Composite gained 0.16%, while the S&P 500 fell 0.38%. The technology sector rose 0.57%, ranking second among major sectors. NVIDIA lagged its tech peers by roughly 2.5 percentage points. The advance-decline ratio stood at 0.6, indicating broad market weakness despite sector-specific gains.

Technical Indicators Remain Bullish

Despite the daily loss, NVIDIA remains above its 20-day, 50-day, 100-day, and 200-day simple moving averages (SMA). The structure supports a longer-term uptrend:

• 20-day SMA: $220.49
• 50-day SMA: $211.23
• 200-day SMA: $196.90

Momentum indicators remain constructive. The Moving Average Convergence Divergence (MACD) is above its signal line with a positive histogram. The stock trades near the upper end of its 52-week range of $164.07 to $236.54.

Traders may watch $228 as near-term resistance. The $190-$197 area could provide longer-term support, anchored by the 200-day SMA at $196.90.

Analyst Outlook and Ratings

NVIDIA carries a Buy consensus rating with an average price forecast of $349.15. Recent analyst actions include:

Citigroup raised its price forecast to $315 from its previous level on Aug. 27 while maintaining a Buy rating.

What the Numbers Show

NVIDIA’s Benzinga Edge scorecard highlights a divergence between growth and valuation metrics. The stock scores 98.07 for Growth and 97.37 for Quality, but only 6.74 for Value. This suggests that while business quality and growth profiles remain strong, the current valuation leaves little room for error, keeping investor focus tightly on execution and future growth delivery.

ETF Exposure

NVIDIA holds significant weightings in several ETFs, making it sensitive to fund flows:

• Franklin Focused Dynamic Growth ETF (NASDAQ: FFOG): 9.73%
• First Trust Innovation Leaders ETF (NYSE: ILDR): 9.79%
• Xtrackers Net Zero Pathway Paris Aligned U.S. Equity ETF (NYSE: USNZ): 9.94%