nvda stock investing 2 billion on SNPS is circular finance scam

 Nvidia has invested $2 billion in Synopsys common stock as part of a strategic partnership, and while the deal has heightened general market concerns about "circular financing" in the AI industry, it is not considered a scam in the typical sense of the term. 

The Deal and the Allegations

• The Investment: On December 1, 2025, Nvidia announced it had purchased $2 billion of Synopsys stock at $414.79 per share to deepen a multi-year engineering and design collaboration.
• The Purpose: The goal is to integrate Nvidia's AI and accelerated computing technology with Synopsys' chip design software, a move Nvidia CEO Jensen Huang described as a "technology upgrade" to speed up the adoption of AI in automated design.
• The "Circular Finance" Context: This investment comes amidst growing scrutiny and criticism from short sellers, including Michael Burry and Jim Chanos, who allege a pattern of circular financing in the broader AI ecosystem. The core of these concerns is that Nvidia invests in AI-related customer companies (like CoreWeave and OpenAI), which then use that capital to purchase Nvidia's GPUs, potentially inflating sales and creating a self-reinforcing, "bubbly" dynamic. 

Why the Synopsys Deal is Different

The Synopsys investment is generally viewed differently from the more controversial customer investments: 

• Not Vendor Financing: Nvidia is a customer of Synopsys' design software, not the other way around. Synopsys CEO Sassine Ghazi explicitly stated there is "no intention or commitment" for the $2 billion from Nvidia to be used to purchase Nvidia GPUs.
• Strategic vs. Sales-Driven: The deal is primarily a strategic technology partnership to co-develop tools and improve the chip design process for various industries, rather than a direct vendor-financing arrangement to prop up a customer's ability to buy products.
• Non-Exclusive: Both companies confirmed the partnership is non-exclusive, meaning Synopsys can still work with Nvidia rivals like AMD or Intel. 

In short, the investment is a legitimate strategic business move, but it adds to the general climate of concern among some critics regarding the interconnectedness and valuations within the current AI industry.