Nvidia’s soaring profits raise alarms about a looming AI market bubble

Nvidia’s recent financial report revealed a net profit near $60 billion and revenue of $96.22 billion, underscoring its massive market value. Despite the impressive numbers, the columnist cautions that the company’s pricey chips may become unaffordable for the data-center builders that rely on them. To sustain demand, Nvidia has begun co-financing customers like OpenAI, yet those firms have yet to generate sufficient returns on their AI investments.

Competitors in China are developing cheaper models using domestic chips, prompting Nvidia to explore open-weight AI to stay competitive. The author likens this intertwined financing to the late-1980s Japanese bubble, where corporate cross-ownership inflated asset prices. The analysis suggests that the current AI boom could be vulnerable to a similar collapse.