Nvidia has shifted production capacity from consumer GeForce graphics cards to AI hardware, causing a shortage in the retail market. These components share manufacturing lines at TSMC, leading to a direct trade-off in output.
Corporate clients, including Amazon, Google, Microsoft, and Meta, are purchasing AI accelerators despite lacking the data center infrastructure to utilize them. Amazon alone received $5 billion worth of hardware in August and committed to monthly purchases of $3 billion.
Analysts suggest Nvidia is inflating its revenue by forcing prepayments for equipment that remains idle in warehouses. This strategy shifts the burden of storage, power, and depreciation onto the buyers while creating an artificial supply bubble.
The current situation mirrors the post-crypto mining boom era. If hyperscalers reach their capital expenditure limits or demand for AI hardware drops, Nvidia faces the risk of a significant market correction and a massive surplus of unsold inventory.
