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Jim Chanos Warns Of ‘Massive Financial Risk’ For CoreWeave, Oracle

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Legendary short seller Jim Chanos It sounds the alarm about the explosion of AI infrastructure and issues a warning: critical accounting oversight related Nvidia Corp. (NASDAQ:NVDA) chips pose a “huge financial risk” for the industry’s aggressive spenders.

recently podcast In the interview, Chanos said data center operators are particularly Oracle Corp. (NYSE:ORCL) and “neocloud” provider CoreWeave Inc. (NASDAQ:CRWV), they overestimate their future profitability by relying on unrealistic depreciation schedules for their artificial intelligence (AI) hardware.

The crux of Chanos’ bearish thesis is the estimated lifespan of the graphics processing units (GPUs) powering the AI revolution.

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While hyperscalers and neoclouds typically amortize these expensive assets over six years, Chanos argues that the relentless pace of Nvidia’s innovation is making them obsolete much faster.

He noted that rental prices for Nvidia’s “Hopper” chips have fallen by about 28% year over year as new models become available. If a chip’s useful economic life was closer to three or four years instead of six, companies would have to greatly increase annual depreciation expenses, resulting in lower reported earnings.

“If the chips last three years, you should amortize one-third of what you spent,” Chanos explained. “This is the bet you should make if you are a CoreWeave investor.”

Benzinga He reached out to Nvidia for comment on Chanos’ claims about GPU depreciation schedules and the lifespan of its chips, but had not received a response at the time of publication.

Chanos singled out Oracle as the most vulnerable among the tech giants. He noted differently: Microsoft Corp. (NASDAQ:MSFT) or Meta Platforms Inc. (NASDAQ:META), Oracle is not currently earning the cost of capital from its massive AI investments.

He described the company’s aggressive spending spree as a “bet the company” strategy that left little room for error.

“Oracle will have fundamental financial problems if AI monetization is delayed until 2030,” Chanos warned.

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Investor sees current cycle as potentially riskier dotcom bubble. Companies purchasing telecom equipment in the late 1990s were profitable giants such as: General Electric Inc. (NYSE:G.E.) And AT&T Inc. (NYSE:T).

The major customers driving computing demand today (start-ups like OpenAI and Anthropic) are burning money.

If venture capital funding dries up or sentiment changes, Chanos predicts that the order books of companies like CoreWeave will quickly evaporate, leaving them with huge debts and outdated hardware.

While NVDA’s shares have gained 27.46% since the beginning of the year, Nasdaq 10 has returned 19.51% in the same period.

Nvidia shares closed at $176.29 on Monday, up 0.73%. While the stock gained 21.84% in value in the last six months, it decreased by 5.53% in the last month.

While it maintains a weaker price trend in the short and medium term, it maintains a strong trend with a weak value ranking in the long term. Additional performance details Benzinga’s Edge Stock Rankingslike that available here.

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This article Nvidia’s Depreciation Time Bomb: Jim Chanos Warns of ‘Huge Financial Risk’ for CoreWeave and Oracle originally appeared Benzinga.com