Chip stocks looked shaky at the beginning of what could be a pivotal week for a market that’s still very much beholden to the fate of the AI trade.

One concern for semis, which are trying without much success to sustain a rebound from an abrupt bear market plunge, was a report that China’s making progress on DUV equipment. That news prompted the worst day for ASML in over a year.

Also weighing on the SOX Monday: Rekindled jitters around the self-referential nature of the deals at the center of the AI mania.

That web of circular tie-ups, which ungenerous types characterize as a giant exercise in quasi-rehypothecation, was back above the digital fold courtesy of a Bloomberg report which tallied three-quarters of a trillion in new deals arranged by Nvidia.

Long story short, Jensen Huang’s still putting the company’s balance sheet behind financing deals that accrue to Nvidia’s benefit. For example, one prospective arrangement finds Huang underwriting OpenAI’s purchase of $350 billion in Nvidia chips for a data center project.

As the figure above shows, Nvidia’s CDS has doubled, jumping from 40bps to 80bps in the short space of a month.

80bps is hardly panic territory, but anytime your CDS doubles, regardless of what it doubles from and where it doubles to, it’s a bad look. Monday’s increase was the largest for any session in the (very) short history of the contracts.

As for the hyper-scalers, their CDS is now wide to the broader IG market even stripping out outlier Oracle.

“AI capex continues to outpace cash generation,” SocGen’s Manish Kabra remarked, in a Monday note reiterating a cautious stance on the big spenders. The figures below give you some context for the CDS story as well as the likely timing on a trough for hyper-scaler free cash flow.

“Watch CDS, not EPS,” Kabra counseled. “A peak in CDS would signal the end of the de-rating phase; until then, our Underweight remains unchanged.”

Critics say the hyper-scalers and AI companies more generally are blurring the line between AI revenue and capex, “shell-gaming one another’s billions back and forth,” as one strategist put it last year, describing the maneuvering as “at least somewhat reminiscent of late-stage dot com-era vendor financing.”

If you’re old enough to remember 2000, you know that’s not a flattering comparison. Vendor financing is exactly what it sounds like: You loan money to your customers so they can buy your equipment.

The biggest problem with that from the perspective of investors is that it can, over time, make it difficult to discern the actual trend in demand. By the time you figure out organic demand’s flagging, it’s too late.

The early-week SOX swoon made Mike Wilson’s silver analogue look particularly ominous.

As the updated figure, from Wilson’s latest dispatch, shows, silver’s “predicting” an imminent downdraft for semis. Perhaps this week’s hyper-scaler earnings could be the catalyst?

“Semis are a classic early-cycle group,” Wilson wrote, adding that chip stocks have “reached peak rate-of-change on earnings revisions.”

Wilson, known primarily (and probably unfairly) as a perennial bear, actually isn’t downbeat on US equities. His year-end S&P target’s 8,000 and he recently called for the hyper-scalers to stabilize, at least relative to chips.

In his latest, Wilson said he still thinks the hyper-scalers “are likely to outperform semis,” but cautioned it “just might happen with both going lower together.”