Prominent economist Tyler Cowen argues that Nvidia (NASDAQ: NVDA) is acting as a "buyer of last resort" for the artificial intelligence industry, a role he believes makes the current boom more durable rather than indicative of a bubble.

Cowen told the Prof G Markets podcast on Friday that Nvidia is investing billions across an AI sector that ultimately purchases its chips. He suggested this dynamic helps new technologies bootstrap themselves, similar to how automobiles developed in the 1920s despite many firms failing.

Nvidia Helps Finance Its Own Customers

Cowen addressed concerns that tech giants are financing an industry that subsequently spends heavily on their infrastructure. He noted that Microsoft, Alphabet, and Meta can play similar roles in supporting the ecosystem.

Nvidia has expanded beyond selling GPUs to actively facilitating capital for its customers. On Aug. 10, the company partnered with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR to establish financing platforms. These platforms aim to mobilize more than $500 billion of third-party capital for AI compute infrastructure.

A week later, Nvidia agreed to guarantee up to $105 billion of OpenAI-linked lease obligations at SB Energy’s Ohio data-center campus. The company also agreed to invest $1.5 billion in SB Energy and serve as the exclusive AI compute provider for the site, according to Reuters.

Bubble Debate Misses the Point

Cowen dismissed the debate over whether AI constitutes a bubble as the "wrong discussion." He argued investors should instead ask if the product works, stating the answer is a "very clear yes."

He compared the current landscape to the early automobile industry, where many companies failed without rendering the underlying technology worthless. While he acknowledged that debt-financed data centers could create "bad macro consequences" such as capital losses or solvency problems if the boom reverses, he stated the fallout would likely fall well short of the 2008 financial crisis.

Polymarket traders assign a 12% chance of the AI bubble bursting this year, suggesting limited near-term collapse risk among betting markets.

What the Numbers Show

The scale of Nvidia’s financial commitments highlights a shift from pure hardware sales to infrastructure financing. The $105 billion lease guarantee for SB Energy dwarfs its direct $1.5 billion equity investment in the same project, indicating a strategy where credit enhancement drives adoption more than direct capital injection.

Nvidia Corp. (NASDAQ: NVDA) now accounts for roughly 8% of the S&P 500’s total market capitalization, a level of concentration that leaves the chipmaker alone outweighing five of the index’s 11 sectors combined.

This scale of dominance, built almost entirely on the artificial intelligence infrastructure buildout, positions Nvidia’s market value above the combined worth of the energy, utilities, real estate, consumer staples, and materials sectors.

Market Cap Now Exceeds Five Sectors Combined

According to data shared by The Kobeissi Letter on X, Nvidia’s market cap is larger than every other sector except information technology, communication services, financials, health care, and consumer discretionary.

The market commentator noted that Nvidia’s historic rise is now equivalent to 16.3% of U.S. GDP. The company’s $5.41 trillion market cap remains ahead of Apple Inc.’s (NASDAQ: AAPL) $4.74 trillion, after the two companies have repeatedly traded the title of the world’s most valuable company since 2024.

Nvidia first passed Apple to claim the top spot in June 2024, briefly lost it, then reclaimed the lead from Microsoft Corp. (NASDAQ: MSFT) in June 2025. It crossed $5 trillion in October 2025. Apple briefly reclaimed the title in July before Nvidia’s latest earnings pushed it back into the lead.

Growth that Outpaces Peers

Nvidia has guided for $108 billion in third-quarter revenue, which would mark roughly 1,730% revenue growth over four years. This pace is unmatched by any company of its size in modern history.

Second-quarter revenue of $96.22 billion beat Wall Street’s $92.11 billion estimate. Raymond James analyst Simon Leopold said Nvidia could reach $1 trillion in annual sales by fiscal 2029.

ETF Exposure

The VanEck Semiconductor ETF (NASDAQ: SMH), which has gained 47.46% year-to-date and 92.19% over the past year, allocates 22.11% of its portfolio to Nvidia.

The Technology Select Sector SPDR Fund (NYSE: XLK) holds a 14.47% weighting in the company and is up 27.23% year-to-date and 40.50% over the trailing 12 months.

Meanwhile, the iShares Semiconductor ETF (NASDAQ: SOXX) maintains a 9.01% allocation to Nvidia, with year-to-date returns of 59.85% and 107.48% over the past year.

Among broader market funds, Nvidia makes up 8.44% of the Invesco QQQ Trust (NASDAQ: QQQ), which has climbed 15.68% year-to-date and 24.41% over the past year. It accounts for 7.71% of the SPDR S&P 500 ETF Trust (NYSE: SPY), which is up 12.00% year-to-date and 18.86% over the past year.

What the Numbers Show

Nvidia’s five-year return of 882.53% vastly outpaces the S&P 500’s 69.04% and the Nasdaq’s 70.65%, highlighting the extreme concentration of alpha within the semiconductor segment relative to broader equity indices.

Price Action

Nvidia’s shares climbed 3.21% to close at $224.41 on Wednesday and gained 0.44% in extended trading. Benzinga edge rankings indicate Nvidia’s stock has a Momentum score in the 75th percentile and a Growth score in the 98th percentile.