The financial world is now split into two camps over Nvidia. Following the chipmaker’s historic crossing of the $5.05 trillion valuation mark, the “boom or bust” debate is no longer a fringe discussion but a central question of global economic stability.
The “boom” camp has a mountain of evidence. They point to the company’s $1 trillion value-add in a mere three months. They highlight a $500 billion order book, a $100 billion deal with OpenAI, and key partnerships with Uber, Nokia, and the US government. To them, this is the start of an AI revolution.
The “bust” camp is equally convinced and armed with dire warnings. The Bank of England and the IMF, two of the world’s most prominent financial institutions, have both formally warned of an AI bubble, suggesting this valuation is unsustainable.
Skeptics are particularly critical of the massive $100 billion OpenAI deal, which they describe as “circular” and symptomatic of a market inflating itself. They argue the demand isn’t entirely real.
The crux of their argument is the profitability problem. Analysts are concerned that “nearly all AI pilot programs in businesses fail.” This suggests the incredible demand for Nvidia’s chips is based on speculation, not proven, profitable applications, placing the global economy in a precarious position.