---
title: "AI Bubble Warning: Billionaire Investors Dump Nvidia Hours Before Make-or-Break Earnings"
description: SoftBank and Peter Thiel exit Nvidia before earnings as options signal a $320bn swing. Are AI valuations stretched amid circular financing and fading momentum?
author: Darie Nani (Editor-in-Chief)
date: 2025-11-18T15:36:26.000Z
updated: 2026-04-01T12:06:41.199Z
canonical: https://www.sovereignmagazine.com/article/ai-bubble-warning-billionaire-investors-dump-nvidia-hours-before-make-or-break-earnings
image: https://cdn.nanimediahouse.com/jensen-huang-headshot-1.webp
categories: Markets
content_type: News
region: United States
publication: Sovereign Magazine
about:
  - type: Organization
    name: Nvidia
---

Two of the world’s most sophisticated investors have quietly exited their entire Nvidia positions worth nearly $6 billion combined, just 48 hours before the AI chipmaker reports earnings that could trigger a $320 billion price swing. The timing raises uncomfortable questions about whether artificial intelligence’s flagship stock has become too rich for even the smartest money.

[Peter Thiel’s fund dumped its complete 537,742-share stake](https://www.reuters.com/business/media-telecom/peter-thiels-fund-offloaded-nvidia-stake-third-quarter-filing-shows-2025-11-17/) worth approximately $100 million during the third quarter, whilst [SoftBank offloaded all 32.1 million shares for $5.83 billion](https://www.cnbc.com/2025/11/11/softbank-sells-its-entire-stake-in-nvidia-for-5point83-billion.html) in October. These aren’t ordinary profit-taking moves – they represent complete capitulation by investors who built fortunes identifying breakthrough technologies before the crowd.

## Technical Breakdown Signals Trouble

Monday’s market action provided the first major technical warning since Nvidia’s meteoric rise began. The [S&P 500 and Nasdaq both closed below their 50-day moving averages](https://www.reuters.com/business/us-stock-futures-rise-markets-await-nvidia-earnings-government-data-2025-11-17/) for the first time since 30 April, with the Dow plunging 557 points. Nvidia shares fell 1.9% and served as the biggest drag on major indices.

This technical deterioration coincides perfectly with institutional flight from [AI’s most valuable company](https://www.sovereignmagazine.com/article/red-day-for-team-red-amd-drops-17-in-worst-session-since-2017-despite-record-earnings). When billionaire investors who made their names on prescient technology bets suddenly head for the exits, retail investors might want to pay attention.

## The Contradiction Between Words and Actions

Wall Street analysts remain remarkably bullish heading into Wednesday’s results. [Wedbush analysts publicly stated they ‘expect good news’ from Nvidia’s quarterly results](https://seekingalpha.com/news/4522830-wedbush-says-expect-good-news-from-nvidias-quarterly-results), maintaining their optimistic stance despite mounting evidence of institutional scepticism.

This disconnect between public analyst recommendations and private institutional behaviour mirrors classic bubble psychology. During the dot-com boom, analysts maintained ‘buy’ ratings on internet stocks even as smart money quietly liquidated positions months before the crash. The current situation bears striking similarities to what many experts are calling [the AI investment paradox where bubble warnings are mounting](https://www.sovereignmagazine.com/article/the-ai-investment-paradox-is-the-bubble-about-to-burst).

Options markets suggest Wednesday’s earnings carry unprecedented stakes. The $320 billion potential price swing implied by options activity represents roughly the entire market capitalisation of companies like Coca-Cola or Netflix. Such extreme volatility expectations typically emerge when fundamental valuations have stretched far beyond reasonable bounds.

## Circular Financing Concerns Mount

Institutional scepticism may reflect growing concerns about circular financing within the AI sector. Nvidia’s investment in OpenAI creates artificial demand for its own chips, as the AI company uses Nvidia’s funding to purchase Nvidia’s products. This arrangement inflates revenue figures whilst masking authentic market demand. The complex relationships between [AI chip companies and major AI firms like OpenAI](https://www.sovereignmagazine.com/article/challenged-by-openai-advancement-intel-faces-a-sharp-decline-in-its-stock-price) continue to raise questions about market dynamics.

SoftBank’s complete divestment appears particularly telling given the company’s history of aggressive technology betting. Masayoshi Son built SoftBank’s reputation by holding winning positions through multiple market cycles, making his complete Nvidia exit noteworthy.

## Historical Precedent for Bubble Deflation

The current situation bears striking resemblance to early 2000, when institutional investors began quietly reducing technology holdings whilst public enthusiasm remained at fever pitch. Cisco Systems, the internet’s infrastructure darling, traded at similar valuation multiples to Nvidia today before losing 90% of its value over two years.

During bubble periods, early institutional exits often precede broader market recognition by months. The smartest investors typically reduce positions well before fundamentals deteriorate sufficiently to change analyst opinions or shake retail confidence. Given that [Nvidia’s valuation now surpasses Germany’s entire economy](https://www.sovereignmagazine.com/article/nvidia-valuation-surpasses-germany-gdp-bubble), such historical parallels become increasingly relevant.

## Wednesday’s Results Could Trigger Cascade

Nvidia’s Wednesday earnings report carries implications extending far beyond a single company. The [AI investment thesis supporting trillions in market capitalisation](https://www.sovereignmagazine.com/article/apple-reaches-lowest-nasdaq-correlation-in-20-years-as-ai-spending-unnerves-investors) depends heavily on continued validation from the sector’s undisputed leader.

Cross-ownership relationships within the AI sector amplify potential correction risks. Technology companies that invested heavily in Nvidia shares whilst simultaneously purchasing its products face double exposure to any valuation reset. Dell, Microsoft and numerous cloud providers all maintain significant Nvidia positions alongside substantial chip purchase commitments. The increasing global competition, including [challenges from Chinese AI firms like DeepSeek](https://www.sovereignmagazine.com/article/china-s-deepseek-takes-on-us-tech-giants-what-this-means-for-project-stargate), adds another layer of complexity to the sector’s outlook.

A disappointing earnings report could trigger cascading effects across interconnected AI investments. Exchange-traded funds focused on artificial intelligence hold concentrated Nvidia positions, meaning institutional selling could accelerate if results fail to justify current valuations.

## Smart Money Speaks Louder Than Analysts

The contradiction between institutional behaviour and analyst optimism suggests Wednesday’s results may surprise markets in ways few expect. When Peter Thiel and SoftBank simultaneously exit positions worth nearly $6 billion, their actions communicate more than any research report.

Thiel’s investment philosophy emphasises identifying breakthrough companies before mass adoption occurs. His complete Nvidia exit suggests either the revolution has fully played out or current valuations discount too much future growth. For investors looking to navigate these turbulent waters, understanding [how to diversify AI stock portfolios for long-term potential](https://www.sovereignmagazine.com/article/how-to-diversify-your-investment-portfolio-ai-stocks-with-long-term-potential) becomes increasingly critical.

Markets will soon discover whether these billionaire investors spotted something Wall Street analysts missed, or whether artificial intelligence’s most valuable company can justify expectations that have driven its market capitalisation beyond $3 trillion. Wednesday’s earnings will likely provide the answer, along with the first real test of whether AI’s investment bubble can withstand scrutiny from the companies that created it.

## Further Context

### What is circular financing and why does it raise concerns about Nvidia’s valuation?

Circular financing occurs when companies invest in each other, creating loops of ownership and financial support that can artificially inflate valuations. In Nvidia’s case, the company invests money in OpenAI, which then uses those funds to purchase Nvidia’s AI chips. This arrangement creates a closed loop where Nvidia’s revenue appears stronger than organic market demand would suggest. The problem for investors is distinguishing between genuine customer demand and sales generated by the company’s own capital flowing back through its investment portfolio. When circular financing becomes significant, it obscures true business fundamentals and makes valuation metrics less reliable. Critics worry that if these investment relationships unwind, the artificial demand they created disappears, potentially revealing weaker underlying business than revenue figures suggested.

### What does the $320 billion potential price swing mean?

The $320 billion figure represents the potential change in Nvidia’s market capitalisation that options traders are pricing in following the earnings report. This is calculated by analysing options contracts traded ahead of the announcement, particularly straddles where traders buy both call and put options at the same price. The premiums traders pay for these options reflect how much they expect the stock price to move in either direction. Options market makers then translate this expected percentage move into dollar terms by multiplying it against Nvidia’s total market value, which exceeds $3 trillion. A $320 billion swing represents roughly 10% of Nvidia’s market capitalisation and exceeds the entire value of major corporations like Coca-Cola or Netflix. Such enormous expected volatility typically indicates markets are deeply uncertain about whether current valuations can be justified, with outcomes potentially ranging from validation of the AI investment thesis to the beginning of a significant correction.

### Why are Peter Thiel and SoftBank’s exits particularly significant?

Peter Thiel co-founded PayPal and built his reputation identifying breakthrough technology companies before mainstream recognition, with early investments in Facebook and positions in Apple and Microsoft. His investment philosophy focuses on finding monopolistic technology companies with sustainable competitive advantages, making his complete exit from Nvidia a notable signal. SoftBank’s Masayoshi Son famously invested $20 million in Alibaba around 2000, a stake that eventually grew to roughly $150 billion by 2020. Son’s Vision Fund was also an early backer of Nvidia, building a $4 billion position in 2017 when AI enthusiasm was far more muted. Both investors have track records of holding winning positions through multiple market cycles rather than trading around short-term volatility. Their simultaneous complete exits, rather than mere position reductions, suggest they believe Nvidia’s valuation has reached levels where further upside is limited or downside risks have become unacceptable. When investors known for conviction in breakthrough technologies abandon positions entirely, it often signals they see either overvaluation or emerging fundamental concerns invisible to broader markets.

### What does it mean when markets cross below the 50-day moving average?

The 50-day moving average represents the average closing price of a stock or index over the previous 50 trading sessions, providing a smoothed trend line that filters out daily volatility. Technical analysts and algorithmic trading systems use this indicator to gauge medium-term momentum. When a stock or index crosses below its 50-day moving average, it signals that recent prices are falling below the recent trend, potentially indicating weakening momentum or a shift from bullish to bearish sentiment. Many professional traders and automated systems interpret this as a sell signal, which can trigger additional selling pressure as these systems execute programmed responses. The significance increases when major indices like the S&P 500 and Nasdaq simultaneously break below this level after extended periods above it, as occurred on Monday for the first time since 30 April. Such coordinated technical breakdowns often precede larger market corrections, though they can also prove temporary. The indicator matters less for its predictive accuracy than for the fact that many market participants respond to it, creating self-fulfilling momentum effects.