AI Circular financing is not a red flag: Aptus Capital Advisors

August 28, 2026 - 03:04

David Wagner, a portfolio manager at Aptus Capital Advisors, is pushing back against the idea that circular financing in the AI sector should worry investors. He argues that the practice, where companies invest in each other's infrastructure and services, is not a red flag but rather a natural step in the industry's evolution.

Wagner expects the data center trade to face some pressure in the second half of 2026, but he attributes that to sentiment rather than any underlying weakness in fundamentals. He believes the market is getting ahead of itself with concerns about overbuilding or a slowdown in demand. Instead, he sees the current financing structures as a sign that the AI and compute industry is maturing, with companies finding more sophisticated ways to share risk and capital.

On Nvidia specifically, Wagner is bullish. He sees the stock price reaching $275 in the coming months, driven by continued strong demand for its chips and the ongoing expansion of AI infrastructure. He notes that while the market may be nervous about the pace of spending, the actual deployment of AI models and services is still in its early stages, leaving plenty of room for growth. For investors, his message is simple: do not confuse market jitters with a broken business model. The AI trade may be volatile, but the long-term story remains intact.