Wire flash
Bond King Gundlach: Wall Street's $500B AI bet is like a warehouse full of bananas
Editorial responsibility
- No named human review is recorded for this page.
- Source reporting is collected, normalized, translated or condensed automatically when needed.
- Automatically published source-backed update
Jeff Gundlach, CEO of DoubleLine Capital, criticized Nvidia's $500 billion AI infrastructure financing initiative, comparing it to issuing asset-backed securities guaranteed by bananas. The fund, announced on August 10, 2026, involves Nvidia partnering with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR to finance data centers and AI infrastructure. Gundlach questioned the logic of using 'assets of unknown life' as collateral, reflecting broader investor anxiety about AI profitability and the risk that computer chips may depreciate faster than loans are repaid. Despite concerns, demand for AI chips remains high.
Source report
In mid-August, chipmaking giant Nvidia announced a $500 billion effort to jointly finance the AI boom alongside Wall Street's biggest investment banks — but not everyone is a fan of this development.
Jeff Gundlach, the founder and CEO of Los Angeles-based DoubleLine Capital, expressed skepticism about the $500 billion fund, saying it "will not likely age well" in a post on X. He questioned the group's logic in using "assets of unknown life" as collateral in the financial arrangement.
Gundlach then took it a step further, comparing the initiative to issuing asset-backed securities guaranteed by bananas. "Why not do a 30 year ABS deal backed by warehouses of bananas? It's OK, they'll be newly engineered bananas of unknown life," he added.
Nvidia did not immediately respond to a request for comment from Moneywise.
The Deal
On Aug. 10, Nvidia CEO Jensen Huang announced the partnership with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR. The initiative is designed to mobilize a staggering amount of capital to build out the data centers, servers, and cooling systems underpinning the AI boom, while standardizing its financing.
"We are helping create a new class of productive, investable infrastructure: AI factories," Huang said in the statement. "In AI, compute is revenue… That is why we are bringing the world's leading long-term capital providers together to independently underwrite AI infrastructure."
The 'Bond King' Taps Into Deeper Concerns on AI Financing
Gundlach is a veteran bond investor nicknamed "the Bond King" for his acumen in trading mortgage-backed securities. DoubleLine Capital currently manages $95 billion in financial assets, including residential mortgage-backed securities.
Gundlach's remarks reflect lingering anxiety within investment circles about AI's profitability. In Nvidia's case, clients are struggling to secure sufficient financing to purchase its chips, often with high interest rates attached if they take out a loan.
AI's rapid development has raised questions about how long the computer chips powering the AI buildout — such as those from Nvidia — will retain their value, given that the loans financing them will not be paid off for years. It is possible that the collateral will not be worth enough to cover the loan amount, especially if AI companies fail to turn sizable profits.
For now, demand among tech companies for AI-powering chips remains virtually unchecked, driving up prices and sustaining the frenzy.
On August 15, Gundlach urged investors to "watch out.
Source
Yahoo FinanceWestern
Part of this Story
Nvidia Partners with Wall Street Giants for $500 Billion AI Infrastructure Financing