Bloomberg Surveillance · Tuesday, July 7, 2026
Michael Green likens the current AI financing mechanism, where companies like Nvidia borrow money to buy chips, to Cisco's vendor financing in the late 1990s. He warns that this model, which manufactures demand, could lead to overstated profit margins and a potential market correction, similar to the dot-com bubble when customers ultimately struggled to generate profits.
“If you are a customer of in Video and you borrow the money to buy the in video chips, you don't spend much time negotiating the price. And it's really that simple. They've been able to manufacture the demand for their own chips.”
“How long that continues and how long it allows the exceptional profit margins very very hard to know. This is the same phenomenons on the late nineteen nineties with vendor financing from Cisco. So we know that eventually this runs out, the customers ultimately have to be generating profits.”
“They had basically a monopoly and was able to lend the money to customers who would pay the most to access it. The validity of those debt contracts ultimately became very much in question when we discovered that web websites built at exceptionally high cost offering subsidized access to consumer products was not a particularly good business, and as that collapsed, we ultimately discovered that the profits that Cisco had been reporting were radically overstated.”