The Bond King Goes Bananas Over Nvidia's $500 Billion Move. How It May Be Affecting Your Portfolio. Rob Isbitts Sat, August 22, 2026 at 6:00 AM PDT 5 min read NVDA BLK The title of the "Bond King" is somewhat in contention. Many would give it to Bill Gross, though over the years, a younger Jeffrey Gundlach has at least shared the title. In any case, when Gundlach posts something like this, it is worth . . . peeling back, shall we say? www.x.com Gundlach took aim at Wall Street's newest financial engineering trend. His beef? Nvidia's (NVDA) agreement with major private credit and asset management firms such as Apollo, BlackRock, Blackstone, KKR, and Goldman Sachs. More News from Barchart Nvidia Q2 Preview: Strong Earnings and Low Valuation Set the Stage for Upside Third Point Starts to Raise Alarm Bells on Broadcom After Dumping AVGO Stock in Q2 A $28.7 Billion Reason to Buy SK hynix Stock Now Tired of missing midday reversals? The FREE Barchart Brief newsletter keeps you in the know. Sign up now! The consortium's goal is to fund massive artificial intelligence (AI) data center infrastructure and chip purchases by issuing long-term debt backed by the chips themselves as collateral. Gundlach calls out a glaring duration and depreciation mismatch. And, while time will tell if he is right, I repeat to my audience weekly my own concerns that AI compute spending has reached the point where lofty expectations (via stock prices) cannot possibly be met. But hey, that's just the outcome, not the current excitement. There's a big difference, as we learned in both the dot-com bubble and more recently in the aftermath of the cryptocurrency runup. Breaking Down Gundlach's Argument At the heart of Gundlach's critique is that this is the type of collateral that spoils like bananas. That is, Nvidia's GPU product refresh cycles run on a fast 18-month to 24-month round trip. Thus, issuing long-dated debt secured by hardware that may be technologically obsolete or vastly diminished in value in a few years creates a huge mismatch. One which, in the short attention span zone we all seem to live in nowadays, is going to be a big problem for tech investors even if it's not right now. That is why Gundlach sarcastically compared securitizing GPUs to issuing a 30-year bond backed by "warehouses of newly engineered bananas." Gundlach noted in subsequent comments that when market tops form, they rarely ring a bell. Instead, they showcase financial innovation relying on dubious ratings to turn speculative tech capital expenditures into a pseudo-safe asset class. Mark Cuban responded to that post in agreement, noting that "chips as an asset class will be the new crypto." To me, it smacks of both 2008 and 1987, whereby financial magic turned into, well, rotten bananas. Story Continues The ETF Effect If this ends up as a pie in the face of NVDA shareholders, that will only be the start of it. As the ETF guy around here, I feel...
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