Nvidia recently announced a staggering $100 billion investment in OpenAI, raising investor concerns about a potential financial bubble in the AI sector. As the leading AI chipmaker, Nvidia engages in “circular” transactions, financing its own customers, which may inflate perceived AI demand. This strategy, while generating immediate revenues, mirrors historical technology bubbles marked by revenue “roundtripping” and customer-financing methods, raising red flags about sustainability.
Nvidia’s investments in companies like CoreWeave and startups in the UK further exemplify this pattern, enabling them to access cheaper debt financing. Despite promising returns—Wall Street estimates a $35 billion return on the OpenAI investment—analysts worry about the risks tied to potential overvaluation.
The intricate web of Nvidia’s financial dealings, reminiscent of past tech bubbles, could lead to severe repercussions if demand doesn’t meet optimistic projections. Investors are increasingly wary as these valuations edge closer to bubble territory.
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