AI Investment Bubble Concerns Intensify as Industry Leaders Warn of 'Irrationality' Despite Nvidia's Strong Earnings

Google's Sundar Pichai warns of "irrationality" in trillion-dollar AI investment boom

On Tuesday, Alphabet CEO Sundar Pichai warned of "irrationality" in the AI market, telling the BBC in an interview, "I think no company is going to be immune, including us." His comments arrive as scrutiny over the state of the AI market has reached new heights, with Alphabet shares doubling in value over seven months to reach a $3.5 trillion market capitalization. Speaking exclusively to the BBC at Google's California headquarters, Pichai acknowledged that while AI investment growth is at an "extraordinary moment," the industry can "overshoot" in investment cycles, as we're seeing now. He drew comparisons to the late 1990s Internet boom, which saw early Internet company valuations surge before collapsing in 2000, leading to bankruptcies and job losses. "We can look back at the Internet right now. There was clearly a lot of excess investment, but none of us would question whether the Internet was profound," Pichai said. "I expect AI to be the same. So I think it's both rational and there are elements of irrationality through a moment like this." Over the past year, some analysts and tech industry critics have expressed increasing skepticism about a web of $1.4 trillion in deals surrounding Google competitor OpenAI in particular. The company has committed to spending $1.4 trillion on infrastructure over eight years, while it expects to generate around $13 billion in revenue this year. OpenAI CEO Sam Altman told reporters at a private dinner in August that investors are "overexcited" about AI models and that "someone" will lose a "phenomenal amount of money." Reacting to the Pichai comments, prominent AI industry critic Ed Zitron told Ars Technica, "I think that this is the first moment where a magnificent 7 feels it's necessary to be on the right side of history, leaning on the shaky talking point of 'there was a lot of over investment in the Internet too' because there really isn't a defense for the -- to use his own terminology -- 'excess investment' in AI." He added, "I imagine others will follow."

AI mania is making Nvidia a lot of money

AI companies are spending so much on infrastructure that Nvidia's data center business now brings in nearly $50 billion. But is this sustainable growth or just the latest tech mania? And should we even be calling it a "bubble" when the belief in AI's future is what's holding the whole ecosystem together? This week on Equity, Kirsten Korosec, Anthony Ha, and Sean O'Kane dig into Nvidia's massive earnings beat, the circular economy of AI infrastructure spending, and whether CEO Jensen Huang's optimistic vision of AI agents handling everything in our daily lives can justify the investment.

Bubble Trouble: AI rally shows cracks as investors question risks

NEW YORK, Nov 21 (Reuters) - The biggest bout of volatility in U.S. stocks in months has revealed cracks in the artificial intelligence-related rally, raising questions about whether the market has been in the grips of a speculative bubble that may be popping. Soaring valuations in AI stocks this year have stoked worries that Wall Street may be inflating another speculative bubble, with some of these fears coming to the fore after a stellar earnings report from AI bellwether Nvidia failed to rally the stock and broader market. Sign up here. In recent days investors have been watchful of emerging signs of cracks in the AI investment narrative. Several high-flying AI stocks have experienced sharp pullbacks, questions are mounting about when AI investments will translate into actual profits, and concerns are growing that enthusiasm may be outpacing the technology's near-term capabilities. Investor sentiment has been rattled recently by several developments, including a noticeable dip in retail traders' enthusiasm for "buying the dip." This caution comes alongside a hit to Oracle bonds on news the company plans to increase its substantial debt to finance artificial intelligence infrastructure, and as lenders seek greater protection on loans to major tech companies, citing concerns over debt-financed AI investments. The boom and recent retreat in AI and AI-adjacent stocks has drawn comparisons to some of history's most notorious market manias, from the dot-com frenzy of the late 1990s to the more recent cryptocurrency boom. At the heart of investors' concerns about a market bubble are lofty valuations. Despite the recent pullback, valuations remain elevated and investors are wary of risks around customer capital spending and financing, plus challenges in expanding data center capacity amid energy constraints and memory chip shortages. Alphabet Chief Executive Sundar Pichai recently said no company would be unscathed if the artificial intelligence boom collapses, but Nvidia CEO Jensen Huang on Wednesday shrugged off concerns. Not all bubbles are created equal, and the warning signs that signal the buildup of excess in one bubble can differ significantly from those in another. Historical data shows dramatic variations in how asset manias unfold - from the speed of their collapse to the years required for recovery. The Japanese stock market crash of the early 1990s took decades to recover, while the 2021-2022 crypto crash played out in a matter of months. Understanding these patterns matters for investors trying to gauge whether today's AI enthusiasm represents rational exuberance over a transformative technology or the kind of speculative excess that ends in tears. Some charts here help assess how the AI mania compares with historic bubbles and what stage it is in, if indeed this is a bubble. Its recent wobble notwithstanding, the U.S. stock market's valuation has surged into territory that historically preceded major downturns, with the Buffett Indicator -- a gauge favored by billionaire investor Warren Buffett -- flashing warning signs. The indicator, which compares total U.S. stock market capitalization to gross domestic product, recently rose above 200%, surpassing levels last seen at the pandemic-era market peak in 2021. The metric currently stands near its highest level on record, surpassing even the dot-com bubble of 2000. Named after the Berkshire Hathaway chairman, the ratio shows elevated readings before major market corrections since 1975. Other stock valuation gauges also show elevated readings, though not at historical highs. The S&P 500's price-to-earnings ratio has climbed to about 23 times, based on 12-month earnings estimates for its constituents, around its highest level in five years and well above its 10-year average of 18.7, according to LSEG Datastream. A separate valuation measure - the CAPE ratio, or Shiller P/E ratio - which measures earnings averaged over 10 years to adjust for economic cycles, also shows elevated readings, though not yet at the heights touched during past bubbles. The Nasdaq's current trajectory during the artificial intelligence boom bears a striking resemblance to its dot-com era path, albeit with less exuberance, backing the view that if this is a bubble it may still be early stage. The tech-heavy index climbed roughly 100% in the three years following ChatGPT's November 2022 launch, mirroring the early stages of excitement that followed Netscape's August 1995 IPO. A key ingredient in past stock market bubbles has been runaway investor optimism, which appears to be absent now. The American Association of Individual Investors survey, a weekly poll that measures investor sentiment among individual retail investors in the U.S. stock market, shows bullish sentiment at 38%, in line with its long-term average. That's a far cry from the 75% high hit in January 2000 or even the 57% high scaled during the meme-stock mania in 2021. While elevated bullishness is not a necessary precondition for a market reversal, heightened bullishness would have backed the view that investors have grown too complacent. Historical data shows that prolonged periods of above-average optimism often precede market turbulence, as crowded trades and stretched valuations leave little room for disappointment. Reporting by Saqib Iqbal Ahmed; Additional reporting by Lewis Krauskopf and Matt Tracy; editing by Megan Davies and Deepa Babington Our Standards: The Thomson Reuters Trust Principles., opens new tab

Bubble fears ease but investors still waiting for AI to live up to its promise

Fears about the artificial intelligence boom turning into an overblown bubble have evaporated for now, thanks to a stellar earnings report from Nvidia that illustrated why its indispensable chips transformed it into the world's most valuable company. But that doesn't mean the specter of an AI bubble won't return in the months and years ahead as Big Tech gears up to spend trillions of dollars more on a technology the industry's leaders believe will determine the winners and losers during the next wave of innovation. For now, at least, Nvidia has eased worries that the AI craze propelling the stock market and much of the economy for the past year is on the verge of a massive collapse. If anything, Nvidia's quarterly report indicated that AI spending is picking up even more momentum. The highlights, released late Wednesday, included quarterly revenue of $57 billion, a 62% increase from the same time last year. That sales growth was an acceleration from the 56% increase in year-over-year revenue from the May-July quarter. What's more, Nvidia forecast revenue of $65 billion for the current quarter covering November-January, which would be a 65% year-over-year increase. Given Nvidia's forecasts, "it is very hard to see how this stock does not keep moving higher from here," according to analysts at UBS led by Timothy Arcuri. The UBS analyst also said the "AI infrastructure tide is still rising so fast that all boats will be lifted." Nvidia's numbers are viewed through a window that extends far beyond the Santa Clara, California, company's headquarters because its products are needed by a wide range of companies -- including Big Tech peers like Microsoft, Amazon, Alphabet and Meta Platforms -- to build data centers that are becoming known as AI factories. "AI spending isn't just holding up, it's accelerating. That's exactly what the market needed to see," said Jake Behan, head of capital markets for investment firm Direxion. The numbers initially lifted Nvidia's stock price by as much as 5% in Thursday's trading, while other tech stocks tied to the AI spending frenzy also got a boost. But Nvidia's shares and other tech stocks backtracked later in the session as investors found other issues besides AI, such as the government's latest jobs report and the future direction of interest rates. Even with a slight downturn in its stock price amid the broader market decline, Nvidia remains valued at $4.5 trillion, more than 10 times its valuation three years ago when OpenAI released its ChatGPT chatbot, triggering the biggest technological shift since Apple released the iPhone in 2007. Nvidia's rapid rise has turned its CEO Jensen Huang into the chief evangelist for the AI revolution and he sought to use his bully pulpit during a late Wednesday conference call with industry analysts to make a case that the spending to make technology with humanlike intelligence is just beginning. "There's been a lot of talk about an AI bubble. From our vantage point, we see something very different," Huang insisted while celebrating "depth and breadth" of Nvidia's growth. Huang is hardly a lone voice in the wilderness. A recent report from Gartner Inc. estimates that worldwide spending on AI will rise to more than $2 trillion next year, a 37% increase from the nearly $1.5 trillion that the research firm expects to be spent this year. But it remains to be seen if all that money pouring into AI will actually produce all the profits and productivity that proponents have been promising. That leaves the question unanswered if all the real spending that's happening will be worth it. The most recent survey of global fund managers by Bank of America showed a record percentage of investors saying companies are "overinvesting." Big Tech is already so profitable that many of the most successful finance their spending sprees with their ongoing stream of revenue and cash hoards in their bank accounts. But some companies, such as Meta Platforms and Oracle, are relying more heavily on debt to fund their AI ambitions -- a strategy that has raised enough alarms among investors that their stock prices have plunged more dramatically than their peers in recent weeks. Both Meta and Oracle have suffered more than 20% declines in their stock prices since late October. But other Big Tech powerhouses leading the way in AI remain just behind Nvidia and iPhone maker Apple in the rankings of the most valuable companies. Alphabet, Microsoft and Amazon boast market values currently ranging from $2.3 trillion to $3.6 trillion. "It is true that valuations are high and that there is some froth in the market, however, the spending on AI is real," said Chris Zaccarelli, chief investment officer for money manager Northlight Asset Management. "Whether or not the spending turns out to be overdone won't be known for many years." -- AP Business Writer Stan Choe in New York contributed to this story.

Nvidia sent a strong signal on AI infrastructure -- but is it a bubble barometer?

Analysts say long-term AI growth still looks solid, with hyperscalers betting on surging computing needs.Nvidia reported strong earnings and forecasts Wednesday, in what analysts saw as a clear signal for continued spending on AI infrastructure. Less clear, however, is whether the results can dispel fears of an AI bubble in markets. Fears have grown in recent months that massive investment in AI by major tech companies could outpace realistic returns, leading some industry insiders and analysts to predict an AI bubble. While Nvidia 's earnings are widely viewed as an important gauge of the AI industry's health, some analysts warn that its performance doesn't tell the whole story. "I think a lot of people will be relieved, but they really didn't need to worry about Nvidia heading [into earnings] anyway," Gil Luria, head of technology research at D.A. Davidson, told CNBC on Thursday. Concern about [an AI bubble] actually isn't an Nvidia problem. The concern is about companies raising a lot of debt to build data centers. Head of technology research at D.A. Davidson Gil Luria The analyst noted that Nvidia's customers, including Microsoft , Amazon , Google and Meta , had already telegraphed plans to accelerate spending on Nvidia chips, and that was reflected in Nvidia's results. This strong demand has also been a boon for Nvidia-related chip stocks, with its key suppliers in Asia trading higher on Thursday. However, Luria said, "concern about [an AI bubble] actually isn't an Nvidia problem. The concern is about companies raising a lot of debt to build data centers." Nvidia's AI chips, also known as Graphics Processing Units, are used in data centers to provide the computing power needed to train and run AI services. These data centers are often owned by specialized operators and major tech companies like Microsoft and Google, known as hyperscalers. As these companies prepare to meet growing AI demand, they've been financing data center roll-out with debt. "Any concerns about Nvidia were certainly laid to rest [with Nvidia's earnings], but that doesn't mean that we don't need to keep an eye on companies lending or borrowing to build data centers," Luria said. The analyst described data centers as inherently speculative investments that could face a reckoning two or three years from now when the world reaches full capacity and the cycle rolls over. Even so, he added, "Nvidia will keep selling chips one way or another." AI chips vs. AI promise Other analysts who spoke to CNCB drew a clear line in the sand between AI chip companies like Nvidia and downstream players, including hyperscalers and firms actually building AI models like Chat-GPT maker OpenAI. "Nvidia's earnings are a strong signal of AI infrastructure spending, but they're not a reliable gauge of whether AI economics are truly maturing across the industry," said Billy Toh, regional head of retail research at CGS International Securities Singapore. "To understand the broader industry's stability, it's more meaningful to look at actual adoption and monetization of AI services at companies like Microsoft, Adobe , and other enterprise platforms, where real customer demand and recurring revenue ultimately confirm whether the AI boom is sustainable," he added. In addition to concerns about hyperscalers taking on debt, AI developers such as OpenAI posting weak revenue relative to their heavy spending have been a source of unease for some investors. That lack of revenue for AI companies has not been felt by Nvidia, which dominates advanced chips and chip software and has deep integration across the AI ecosystem, giving it pricing power and profitable demand. "Even if many AI startups struggle, Nvidia still sells to hyperscalers, sovereign AI initiatives, and enterprises building core infrastructure," Toh said. "This dynamic helps justify its trillion-dollar market cap and why investors view it as the safest way to gain exposure to AI," he said, though that protection will fade as the AI build-out phase slows. Bulls on parade Rolf Bulk, equity research analyst at New Street Research, agreed with the distinction between Nvidia's earnings and the broader AI market. However, he still saw Nvidia's results as a factor that could calm AI bubble fears in the near term. "It's an indicator that hyperscalers and AI companies expect demand for compute to continue to grow strongly in 2026 and beyond," he told CNBC. "Of course, these GPUs need to continue to be well utilized to generate a return for the hyperscalers. That is the bet they're making," he added. While Nvidia may not be a perfect barometer of the AI bubble, analysts like Bulk still see long-term growth ahead for the AI market. "AI infrastructure demand consistently exceeds available capacity, with OpenAI, Anthropic, Amazon, Google, and others all noting that customer demand exceeds their ability to provide the necessary compute," he said. Meanwhile, strong believers in AI, who already discard fears of a bubble, were likely to see Nvidia's earnings as yet another bullish sign for the broader industry. "This is not a bubble. It's just the beginning," said Ray Wang, Constellation Research chairman and AI Forum co-founder, citing Nvidia's $500 billion in bookings for its advanced chips through 2026. Dan Ives of Wedbush Securities echoed that sentiment in an email to CNBC, calling Nvidia's results "a validation moment of no AI bubble and instead early days of the AI Revolution." "There is one chip in the world fueling the AI Revolution and that is Nvidia," Ives added. Nvidia CEO Jensen Huang himself dispelled fears regarding AI in an earnings call on Wednesday. "There's been a lot of talk about an AI bubble," he said. "From our vantage point, we see something very different." -- CNBC's Martin Soong contributed to this report

The A.I. Boom Has Found Another Gear. Why Can't People Shake Their Worries?

It would not be a stretch to describe this period of hyperactive growth in the tech industry as a historic moment. Nvidia, which makes computer chips that are essential to building artificial intelligence, said on Wednesday that its quarterly profit jumped to nearly $32 billion, up 65 percent from a year ago and 245 percent from the year before that. Just three weeks ago, Nvidia became the first publicly traded company to be worth $5 trillion. Microsoft, Google, Apple and Amazon are also now valued in the trillions. In their most recent quarters, the four companies reported more than $110 billion in combined profits. "There's been a lot of talk about an A.I. bubble," said Jensen Huang, Nvidia's chief executive, after his company's blowout quarterly report. "From our vantage point, we see something very different." But some industry insiders say there is something ominous lurking behind all this bubbly news. They look at the same eye-popping growth and the same stunning wealth creation as Mr. Huang and see a house of cards. And they say it is hard to know what the damage will be if it collapses. Even Nvidia's growth can be explained away. Demand for the company's chips doesn't mean people want to use A.I. It merely means that companies are building giant A.I. systems in hopes someone will pay to use them. The Nvidia-led rally on Wall Street lasted only a few hours, after all, and the company's share price was down about 3 percent at the end of trading on Thursday. A sharp reversal in tech stocks pulled the whole market lower, with the S&P 500 dropping 1.6 percent for the day. The heart of the pessimist's case against the A.I. boom, however, is the money pouring into the start-up world and the billions upon billions those companies are spending on data centers. OpenAI, the company that kicked off the boom three years ago, is now worth an estimated $500 billion, making it the most valuable start-up in the world. Anthropic, OpenAI's archrival, is now worth an estimated $183 billion. And Thinking Machines Labs, which was started in February, is already believed to be valued in the tens of billions of dollars. OpenAI is not profitable and doesn't expect to be until 2030. Anthropic is also in the red. Thinking Machines just put out its first product. That hasn't stopped them from spending. Anthropic recently said it would invest $50 billion in new data centers. Sam Altman, OpenAI's celebrity chief executive, said his company was committed to spending $1.4 trillion on computing power for its A.I. pursuits. "What OpenAI is engaged in is the most dramatic case of 'Fake It Until You Make It' that we have ever seen," said Gil Luria, head of technology research at D.A. Davidson. "They are making huge commitments that they literally can't afford." OpenAI and its partners are pumping $500 billion into new data centers in the United States as part of what they call Project Stargate. In today's dollars, that is enough to fund the Manhattan Project 15 times over. It could pay for the entire Apollo moon project. Twice. "Stargate alone -- if it does actually reach $500 billion -- would be the largest infrastructure project in the world, several time over," said Evan Conrad, chief executive of San Francisco Compute, a start-up that specializes in hardware for A.I. An OpenAI spokesman said in a statement that the company believed its trajectory was heading in the right direction, with 800 million weekly users and more than a million business users. "Progress in generational advancements -- like railroads, electricity and the internet -- comes from bold investment and long-term conviction," said the spokesman, Steve Sharpe. "In under three years we've built the fastest-growing consumer and enterprise platform in history." Tech companies, governments and their partners around the world will spend nearly $3 trillion on data centers by 2028, according to analysts at Morgan Stanley. To make that happen, they will borrow nearly a trillion dollars from banks and other financial institutions. Over the last 12 months, Google, Microsoft, Amazon and Meta spent about $360 billion on new data centers. With their huge profits, they can afford it. Other companies have to take on debt. That includes established companies like the software maker Oracle and smaller outfits with names like CoreWeave and Nebius. Because that debt is held by a wide array of financial institutions -- including private credit lenders as well as traditional banks -- experts are struggling to understand how much risk is in the system. Adding to worries, critics say some of the deals OpenAI has made with chipmakers, cloud computing companies and others are oddly circular. OpenAI is set to receive billions from tech companies but also sends billions back to the same companies to pay for computing power and other services. Some financial analysts worry that these deals make the market look stronger than it really is. Ultimately, the health of the market will depend on whether companies like OpenAI can turn a profit before debt overwhelms them. (The New York Times has sued OpenAI and Microsoft, claiming copyright infringement of news content related to A.I. systems. The two companies have denied the suit's claims.) Nvidia has also made some deals that have raised questions about whether the company is paying itself. It announced that it would invest $100 billion in OpenAI. The start-up receives that money as it buys or leases Nvidia's chips. On Tuesday, Nvidia announced a similar $10 billion deal with Anthropic, which will buy $30 billion in A.I. computing backed by Nvidia chips. That money will actually go to buy computing power from Microsoft, which also invested $5 billion in Anthropic. Goldman Sachs has estimated that Nvidia will make 15 percent of its sales next year from what critics also call circular deals. Many companies justify their spending because they're not just building a product, they're creating something that will change the world: artificial general intelligence, or A.G.I., a machine that can do anything the human brain can do. The rub is that none of them quite know how to do it. But Anton Korinek, an economist at the University of Virginia, said the spending will all be justified if Silicon Valley reaches its goal. He is optimistic it can be done. "It's a bet on A.G.I. or bust," Dr. Korinek said. A.I. company's chatbots and image generators are already being used by hundreds of millions of people. Many of them pay monthly fees that can top $100. But it's not so clear that business customers -- the real cash cow for the tech industry -- are as keen to use A.I. Nearly eight in 10 businesses have said they have not yet used A.I. technologies. Just as many have said these technologies had "no significant bottom-line impact," according to recent research from McKinsey & Company. Nonetheless, tech companies say business interest is starting to congeal. Microsoft, Google and Amazon all said they have more customer demand than available supply and they expect to be constrained into next year. Even among some executives of Silicon Valley's wealthiest companies, however, the money sloshing around is worrying. Sundar Pichai, the chief executive of Alphabet, Google's parent company, said in an interview with the BBC this week that the spending and skyrocketing valuations were driven at least in part by "irrationality." If the market crashes, he said, the damage will be widespread. "I think no company is going to be immune, including us," he said. Tech industry veterans often compare the A.I. boom to the dot-com bubble of the 1990s. When that bubble burst, hundreds of start-ups disappeared and established companies that were selling technology to those young outfits experienced huge losses. But other start-ups found lasting success and did, in fact, change the world -- most notably Amazon and Google. "When bubbles happen, smart people get over-excited about a kernel of truth," Mr. Altman told reporters earlier this year. "Are we in a phase where investors as a whole are over-excited about A.I.? My opinion is yes. Is A.I. the most important thing to happen in a very long time? My opinion is also yes."

Sundar Pichai says AI boom shows irrational investment, but Google can weather the coming storm

Serving tech enthusiasts for over 25 years. TechSpot means tech analysis and advice you can trust. Editor's take: Another Big Tech executive has admitted the AI market is in a bubble fueled by "irrational" investment. Overhype and the belief that unproven technology can solve all the world's problems are creating a situation where no company - not even Google - will be immune when it all comes crashing down. Alphabet CEO Sundar Pichai says the AI market is experiencing clear signs of overexuberance, with some investment driven more by hype than fundamentals. Speaking exclusively to the BBC, he called the surge in funding an "extraordinary moment" while acknowledging elements of investor irrationality - a view echoed by OpenAI CEO Sam Altman back in August. Pichai said the tech industry can "overshoot" in cycles of enthusiasm, with investments sometimes running ahead of underlying fundamentals. Despite the froth, he stressed that the technology itself remains transformative, reshaping how people work and interact digitally, equating it to the dot-com boom. "We can look back at the internet right now. There was clearly a lot of excess investment, but none of us would question whether the internet was profound. It's fundamentally changed how we work digitally as a society. I expect AI to be the same. So I think it's both rational, and there are elements of irrationality through a moment like this." The CEO admits that a crash will affect every company in the industry, including Google. However, the search giant's integrated approach - spanning custom AI chips, data platforms like YouTube, and proprietary models - acts as a buffer against market turbulence. Like Altman, Pichai believes Google will weather an AI crash that analysts say is inevitable. This full-stack model positions Alphabet to absorb volatility better than companies that rely on external technologies or partnerships. Pichai also outlined the company's significant UK expansion, committing £5 billion over two years to research and infrastructure, including work at DeepMind in London. For the first time, Google plans to train AI models within the UK, a step that aligns with the government's ambitions to establish the country as a top-tier AI hub. Artificial intelligence's impact on workforces is equally profound, Pichai said. Just as the internet changed how we work, AI will transform the industry, eliminating some jobs while creating others. Success will favor those who adopt and integrate AI tools into their professions. "It doesn't matter whether you want to be a teacher or a doctor," Pichai said. "All those professions will be around, but the people who will do well in each of those professions are people who learn how to use these tools." The rapid growth of AI also carries an environmental cost. Pichai noted that AI consumed one and a half percent of global electricity last year, straining energy systems. He warned that failing to scale energy infrastructure could constrain economic growth. Alphabet remains committed to reaching net zero by 2030 through investment in new energy technologies, even though progress toward the company's climate targets has slowed.

Google boss Sundar Pichai warns 'no company immune' if AI bubble bursts

Every company would be affected if the AI bubble were to burst, the head of Google's parent firm Alphabet has told the BBC. Speaking exclusively to BBC News, Sundar Pichai said while the growth of artificial intelligence (AI) investment had been an "extraordinary moment", there was some "irrationality" in the current AI boom. It comes amid fears in Silicon Valley and beyond of a bubble as the value of AI tech companies has soared in recent months and companies spend big on the burgeoning industry. Asked whether Google would be immune to the impact of the AI bubble bursting, Mr Pichai said the tech giant could weather that potential storm, but also issued a warning. "I think no company is going to be immune, including us," he said.

'AI industry is in a bubble' warns Google DeepMind co-founder

Google DeepMind co-founder Demis Hassabis considers the future of AI This week, talk of the AI industry bubble has heated up, with Google's top executive Demis Hassabis throwing some fuel on this fire while discussing the release of the company's much-anticipated Gemini 3 model. Speaking to podcast Hard Fork hosts Kevin Roose and Casey Newton, the chief executive officer and co-founder of Google DeepMind and Isomorphic Labs echoed what colleague Sundar Pichai - CEO of Google parent Alphabet - also said of the seemingly unsustainable AI industry. "Are we in an AI bubble?" host Kevin asked candidly, to which Hassabis chuckles and pauses to consider his response. "It's too binary a question, I would say," Hassabis replied. "My view on this - this is just strictly just my own opinion - is that there are some parts of the AI industry that are probably in a bubble. If you look at seed investment rounds being multi-ten-billion-dollar rounds with basically nothing, it seems ... there are talented teams, but it seems like that might be the first signs of some kind of bubble." In a similarly timed interview, Pichai warned that even the biggest players, like Alphabet and all its subsidiaries like Google DeepMind, will feel it. "I think no company is going to be immune, including us," he told the BBC. And while the AI bubble is a hot topic as the end of 2025 nears - a year that's seen unprecedented investment and valuations of companies like Alphabet, Nvidia and OpenAI - it's not all doom and gloom. "I think there's a lot of amazing work value to - at least from our perspective that we see - not only all the new product areas, like Gemini app, NotebookLM, and thinking more forward, robotics, gaming," Hassabis pivoted. "And drug discovery we're doing with Isomorphic, and Weymo. So there are all these new 'greenfield' areas. They're going to take a while to mature into massive multi-hundred-billion-dollar businesses, but I think there's actually potential for half a dozen to a dozen there, that I think Alphabet will be involved with, which I'm really excited about." It's no secret that many companies in the field are operating at a loss right now - OpenAI has reportedly hemhoraged US$14 billion in this quarter alone - but the DeepMind boss remains optimistic. "Immediate returns - this is the engine room part of Google, where we're pushing this into all of these incredible multi-billion-user products that people use every day. We have so many ideas, it's just about execution," he added. "I think a lot of that will also bring in near-term revenue and direct returns, while we're also investing in the future. "I feel really good were we are, as Alphabet, whether there's a bubble or not," he continued. "Our job is to be winning in both cases, right? If there's no bubble and things carry on, then we're going to take advantage of that opportunity. But if there is is some sort of bubble and there's a retrenchment, I think we'll also be best-placed to take advantage of that scenario." An easy comparison of where we're at is the dot-com era, during which countless startups were valued on good vibes alone, with just the promise of financial returns on investments in the future. Then everything unraveled in 2000, wiping out many of these companies and tech sector jobs, and contributing to a US recession in 2001 - a brief one, but still one. Now, there are valid concerns that the AI industry - one built on unprecedented investment without adequate financial returns - may follow a similar trajectory. This year has seen some of the market leaders greatly increase in value: Alphabet has reached a valuation of $3.5 trillion, OpenAI has reportedly hit a $500-billion valuation, and NVIDIA has become the first company to ever surpass the $5-trillion mark. This month, however, some big investors are seemingly getting nervous. Nvidia lost big investments from serious players like Peter Thiel's hedge fund, which took back the $94 million it had put on the line, and money manager Michael Burry is now betting against the semiconductor company as well as Thiel's data-mining firm Palantir, predicting the stocks will continue to fall. Burry made a reported $100 million by predicting the 2007 subprime mortgage crisis which led to the great recession the following year (and inspired the book and then the film The Big Short). Pichai told the BBC that current AI spending was experiencing an "extraordinary moment" but conceded there are now "elements of irrationality" in the market that are reminiscent of the "irrational exuberance" that investors had during the dot-com hype. Right now, it seems Hassabis' position is a reasonable one: there's most likely bubble, and if a burst does come, it's most likely going to thin out the crowded AI industry and hit the tech employment sector immediately. And former International Monetary Fund chief economist Gita Gopinath believes such a crash - like the dot-com implosion - would wipe out $20 trillion from US households and $15 trillion from worldwide investors. However, on the other side of the pain - like in 2001 - the AI industry should emerge as a more sensible and less speculative business. And like the internet, AI is here to stay - as are the huge companies like Alphabet, which continues to focus on diverse areas of product development. Hassabis made history in 2024, when he, along with creative partner and DeepMind director Dr. John Jumper, shared the Nobel Prize in Chemistry for their work developing AlphaFold, the AI system that predicts the 3D structure of proteins from their amino acid sequences. This week, Nature detailed the future of DeepMind and the company's focus on science-based development, which is certainly worth a read. As for Gemini 3 - yes, it's a big deal, but many of its tools are yet to be rolled out, and access to the launch model is staggered across platforms in the US. So check out the video below for more.

Google CEO Admits 'Elements of Irrationality' Have Led to an AI Bubble

A growing list of experts, from the Bank of England to investor Michael Burry of 'The Big Short' fame, have indicated belief in an overvaluation of AI stocks to varying degrees. Over the past few months, tech executives leading companies with record valuations thanks to the AI hype have also joined their ranks. Sam Altman said in August that he thinks investors are currently "over-excited" about AI. Just last month, Bezos called AI an "industrial bubble." The latest name to add to that list is Google CEO Sundar Pichai. "Given the potential of this technology, the excitement is very rational. It's also true, when we go through these investment cycles, there are moments we overshoot collectively as an industry," Pichai told the BBC in an interview published on Tuesday. "So, I think its both rational and there are elements of irrationality in moments like these." The Google chief essentially likened the current AI trade to the dot-com bubble, which wiped out around $5 trillion in market value when it burst. "We can look back at the internet right now, there was clearly a lot of excess investment but none of us would question whether the internet was profound or that it drives a lot of impact, it fundamentally changed how we work digitally as a society," Pichai said. "I expect AI to be the same." What's been worrying AI enthusiasts more than the spectre of a bubble ballooning is one bursting. Those worries were raised by some after Meta downsized its AI department last month, following a massive hiring spree over the summer. And then again this past week, when both SoftBank and Peter Thiel's hedge fund Thiel Macro reportedly dumped their stakes in AI darling Nvidia, which is reporting a much anticipated earnings report on Wednesday afternoon. When asked what would happen if this hypothetical AI bubble burst, Pichai said that "no company is going to be immune." That includes Google themselves, even though Pichai said he thinks they are "better positioned." Google is one of several companies that have made big bucks on AI hype. Google-parent Alphabet became the fourth company to pass $3 trillion market cap in September. Meanwhile it continues to pour billions into scaling its AI offerings, including the company's top AI product Gemini. It's not just Google that's shelling out a fortune. Tech giants across the industry are spending exorbitant amounts of money on AI. Pichai told the BBC that the tech industry overall has "well over a trillion dollars of investment" dedicated to building AI infrastructure, a number that is only exponentially increasing with no end in sight. Deutsche Bank said in September that current AI spend is so massive that it could be propping up the entire American economy right now. Meanwhile, an MIT report from August claims that only 5% of businesses that have adopted AI were generating real revenue gains. Nevertheless, Pichai believes AI is still the future of society. In the BBC interview, he had some advice to share on how to navigate this AI-integrated future he and the rest of Silicon Valley are envisioning. Pichai said that people had to "adapt" as he predicted that widespread adoption of AI will cause certain jobs to "evolve and transition." To do so, he claimed, everyone in every occupation should embrace using AI in their work. But just moments after this endorsement of AI-integrated work, he admitted that the technology is prone to errors, unlike the company's other products, like Google Search, which are "more grounded in providing accurate information."

Don't blindly trust what AI tells you, Google boss tells BBC

People should not "blindly trust" everything AI tools tell them, the boss of Google's parent company Alphabet told the BBC. In an exclusive interview, chief executive Sundar Pichai said that AI models are "prone to errors" and urged people to use them alongside other tools. Mr Pichai said it highlighted the importance of having a rich information ecosystem, rather than solely relying on AI technology. "This is why people also use Google search, and we have other products that are more grounded in providing accurate information." While AI tools were helpful "if you want to creatively write something", Mr Pichai said people "have to learn to use these tools for what they're good at, and not blindly trust everything they say". He told the BBC: "We take pride in the amount of work we put in to give us as accurate information as possible, but the current state-of-the-art AI technology is prone to some errors."

Here's why concerns about an AI bubble are bigger than ever

Nvidia CEO Jensen Huang delivers a keynote address at the Consumer Electronics Show (CES) in Las Vegas in January. Patrick T. Fallon/AFP via Getty Images hide caption Perhaps nobody embodies artificial intelligence mania quite like Jensen Huang, the chief executive of chip behemoth Nvidia, which has seen its value spike 300% in the last two years. A frothy time for Huang, to be sure, which makes it all the more understandable why his first statement to investors on a recent earnings call was an attempt to deflate bubble fears. "There's been a lot of talk about an AI bubble," he told shareholders. "From our vantage point, we see something very different." Take in the AI bubble discourse and something becomes clear: Those who have the most to gain from artificial intelligence spending never slowing are proclaiming that critics who fret about an over-hyped investment frenzy have it all wrong. "I don't think this is the beginning of a bust cycle," White House AI czar and venture capitalist David Sacks said on his podcast All-In. "I think that we're in a boom. We're in an investment super-cycle." "The idea that we're going to have a demand problem five years from now, to me, seems quite absurd," said prominent Silicon Valley investor Ben Horowitz, adding: "if you look at demand and supply and what's going on and multiples against growth, it doesn't look like a bubble at all to me." Appearing on CNBC, JPMorgan Chase executive Mary Callahan Erdoes said calling the amount of money rushing into AI right now a bubble is "a crazy concept," declaring that "we are on the precipice of a major, major revolution in a way that companies operate." Yet a look under the hood of what's really going on right now in the AI industry is enough to deliver serious doubt, said Paul Kedrosky, a venture capitalist who is now a research fellow at MIT's Institute for the Digital Economy. He said there is a startling amount of capital pouring into a "revolution" that remains mostly speculative. "The technology is very useful, but the pace at which it is improving has more or less ground to a halt," Kedrosky said. "So the notion that the revolution continues with the same drum beat playing for the next five years is sadly mistaken." The gusher of money is rushing in at a rate that is stunning to financial experts. Take OpenAI, the ChatGPT maker that set off the AI race in late 2022. Its CEO Sam Altman has said the company is making $20 billion in revenue a year, and it plans to spend $1.4 trillion on data centers over the next eight years. That growth, of course, would rely on ever-ballooning sales from more and more people and businesses purchasing its AI services. There is reason to be skeptical. A growing body of research indicates most firms are not seeing chatbots affect their bottom lines, and just 3% of people pay for AI, according to one analysis. "These models are being hyped up, and we're investing more than we should," said Daron Acemoglu, an economist at MIT, who was awarded the 2024 Nobel Memorial Prize in Economic Sciences. "I have no doubt that there will be AI technologies that will come out in the next ten years that will add real value and add to productivity, but much of what we hear from the industry now is exaggeration," he said. Nonetheless, Amazon, Google, Meta and Microsoft are set to collectively sink around $400 billion on AI this year, mostly for funding data centers. Some of the companies are set to devote about 50% of their current cash flow to data center construction. Or to put it another way: every iPhone user on earth would have to pay more than $250 to pay for that amount of spending. "That's not going to happen," Kedrosky said. To avoid burning up too much of its cash on hand, big Silicon Valley companies, like Meta and Oracle, are tapping private equity and debt to finance the industry's data center building spree. One assessment, from Goldman Sachs analysts, found that hyperscaler companies -- tech firms that have massive cloud and computing capacities -- have taken on $121 billion in debt over the past year, a more than 300% uptick from the industry's typical debt load. Analyst Gil Luria of the D.A. Davidson investment firm, who has been tracking Big Tech's data center boom, said some of the financial maneuvers Silicon Valley is making are structured to keep the appearance of debt off of balance sheets, using what's known as "special purpose vehicles." The tech firm makes an investment in the data center, outside investors put up most of the cash, then the special purpose vehicle borrows money to buy the chips that are inside the data centers. The tech company gets the benefit of the increased computing capacity but it doesn't weigh down the company's balance sheet with debt. For example, a special purpose vehicle was recently funded by Wall Street firm Blue Owl Capital and Meta for a data center in Louisiana. The design of the deal is complicated but it goes something like this: Blue Owl took out a loan for $27 billion for the data center. That debt is backed up by Meta's payments for leasing the facility. Meta essentially has a mortgage on the data center. Meta owns 20% of the entity but gets all of the computing power the data center generates. Because of the financial structure of the deal, the $27 billion loan never shows up on Meta's balance sheet. If the AI bubble bursts and the data center goes dark, Meta will be on the hook to make a multi-billion-dollar payment to Blue Owl for the value of the data center. Such financial arrangements, according to Luria, have something of a checkered past. "The term special purpose vehicle came to consciousness about 25 years ago with a little company called Enron," said Luria, referring to the energy company that collapsed in 2001. "What's different now is companies are not hiding it. But having said that, it's not something we should be leaning on to build our future." Silicon Valley is taking on all this new debt with the assumption that massive new revenues from AI will cover the tab. But again, there is reason for doubt. Morgan Stanley analysts estimate that Big Tech companies will dish out about $3 trillion on AI infrastructure through 2028, with their own cash flows covering only half of that. "If the market for artificial intelligence were even to steady in its growth, pretty quickly we will have over-built capacity, and the debt will be worthless, and the financial institutions will lose money," Luria said. Twenty-five years ago, the original dot-com bubble burst after, among other factors, debt financing built out fiber-optic cables for a future that had not yet arrived, said Luria, a lesson, it appears, tech companies are not worried about repeating. "If we get to the point after spending hundreds of billions of dollars on data centers that we don't need a few years from now, then we're talking about another financial crisis," he said. Another aspect of the over-heated AI landscape that is raising eyebrows is the circular nature of investments. Take a recent $100 billion deal between Nvidia and OpenAI. Nvidia will pump that amount into OpenAI to bankroll data centers. OpenAI will then fill those facilities with Nvidia's chips. Some analysts say this structure, where Nvidia is essentially subsidizing one of its biggest customers, artificially inflates actual demand for AI. "The idea is I'm Nvidia and I want OpenAI to buy more of my chips, so I give them money to do it," Kedrosky said. "It's fairly common at a small scale, but it's unusual to see it in the tens and hundreds of billions of dollars," noting that the last time it was prevalent was during the dot-com bubble. Lesser-known companies are getting in on the action, too. CoreWeave, once a crypto mining startup, pivoted to data center building to ride the AI boom. Major AI companies are turning to CoreWeave to train and run their AI models. OpenAI has entered deals with CoreWeave worth tens of billions of dollars in which CoreWeave's chip capacity in data centers is rented out to OpenAI in exchange for stock in CoreWeave, and OpenAI, in turn, could use that stock to pay its CoreWeave renting fees. Nvidia, meanwhile, which also owns part of CoreWeave, has a deal guaranteeing that Nvidia will gobble up any unused data center capacity through 2032. "The danger," said the MIT economist Acemoglu,"is that these kinds of deals eventually reveal a house of cards." Some influential investors are showing signs of bubble jitters. Tech billionaire Peter Thiel sold off his entire stake in Nvidia worth around $100 million earlier this month. That came after SoftBank sold a nearly $6 billion stake in Nvidia. And in recent weeks, AI bubble pessimists have rallied around Michael Burry, the hedge-fund investor who made hundreds of millions of dollars betting against the housing market in 2008. He was the subject of the 2015 film The Big Short. Since then, though, he's had a mixed reputation for market predictions, having warned about imminent collapses that never came to pass. For what it's worth, Burry is now betting against Nvidia, accusing the AI industry of hiding behind a bunch of fancy accounting tricks. He's homed in the circular deals between companies. "True end demand is ridiculously small. Almost all customers are funded by their dealers," Burry wrote on X. He later wrote: "OpenAI is the linchpin here. Can anyone name their auditor?" As tech companies sink billions into data centers, some executives themselves are freely admitting there looks to be some over exuberance. OpenAI CEO Sam Altman told reporters in August: "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes." And Google chief executive Sundar Pichai told the BBC recently that "there are elements of irrationality" in the AI market right now. Asked how Google would fare if the bubble burst, Pichai responded: "I think no company is going to be immune, including us."

Huang contrasts Gelsinger's AI bubble warnings

Agentic AI emergence will demand far greater computing resources globally Nvidia CEO Jensen Huang has dismissed suggestions the global AI market is currently in an economic bubble, arguing instead that current trends point to fundamental changes in computing infrastructure. On the company's recent earnings call, Huang outlined a three-pronged rationale explaining why AI is driving long-term investment in new systems rather than speculative hype. He noted that industries handling data processing, ad recommendations, search systems, and engineering are increasingly turning to GPUs because traditional CPU-based infrastructure cannot meet the demands of AI workloads. Huang's assertions are in stark contrast to those of Pat Gelsinger, former CEO of Intel, who believes the AI sector is in bubble territory, though this could happen gradually rather than suddenly. Huang emphasized AI is not only being integrated into existing applications but will also enable entirely new software capabilities. He said the emergence of "agentic AI," which can operate with minimal user input, reason autonomously, and plan complex tasks. Such developments will require substantially greater computing resources, reinforcing the need for high-performance GPUs. Huang stated that Nvidia is uniquely positioned to address all three categories of AI adoption, encompassing data-intensive workloads, new applications, and autonomous AI operations. "There's been a lot of talk about an AI bubble," Huang said. "From our vantage point we see something very different." "As you consider infrastructure investments, consider these three fundamental dynamics," Huang said. "Each will contribute to infrastructure growth in the coming years." Nvidia reported revenue and profits exceeding analysts' expectations, with guidance also surpassing forecasts. Huang recently projected that AI chip sales could reach $500 billion by 2025 and 2026. The company noted its order backlog does not yet include deals with organizations such as Anthropic or the expanded agreement with Saudi Arabia. CFO Colette Kress confirmed Nvidia remains on track to meet revenue targets, highlighting robust demand for AI-driven systems. Investors have raised concerns about reliance on a small number of hyperscalers, but Huang stressed that Nvidia chips continue to boost cloud provider revenue through AI-enhanced recommendation engines. Huang believes the AI boom will increase traffic across enterprise systems, requiring greater inspection and monitoring capabilities. AI tools and expanding datasets are driving this trend, and Nvidia expects infrastructure growth to continue as AI applications scale. The CEO stressed that what appears as high capital expenditure today reflects foundational shifts rather than speculative investment. Huang concluded by asserting that investors and operators must consider these dynamics when evaluating the AI sector. Nvidia views AI-driven GPU adoption as a structural transformation in computing, signaling long-term growth potential beyond short-term market fluctuations. Via CNBC

Google boss sounds the alarm over trillion-dollar AI bubble

If fears of an AI bubble bursting were already keeping people up at night, recent comments from Alphabet CEO Sundar Pichai certainly won't help. The Google chief sat down with the BBC for an exclusive interview to talk all things AI -- from energy demands to UK investment to the future of jobs. But the most striking moment came when Pichai admitted that if the AI bubble does burst, no one is safe. "I think no company is going to be immune, including us," he told the BBC. In the interview, Pichai said that while the AI sector has seen tremendous growth, there's also a lot of "irrationality" fueling the boom as valuations and investments rocket upward. He warned that the industry can "overshoot" during hype cycles like this, drawing a direct parallel to the dot-com boom and bust of the late 90s and early 2000s. The dot-com era saw early internet companies skyrocket in value on pure optimism, only for the bubble to burst in 2000, wiping out hundreds of companies and countless jobs. The concern now is that AI may follow a similar trajectory. Big Tech valuations have surged in recent months: Alphabet has reached a valuation of $3.5 trillion, OpenAI has reportedly hit a $500 billion valuation, and NVIDIA has become the first company to ever surpass the $5 trillion mark. But cracks are beginning to show. In the past few weeks, several major investors have started offloading NVIDIA stock. On Monday, it was reported that Peter Thiel's hedge fund exited its entire $94 million position. Even more eyebrow-raising, Michael Burry -- famous for predicting the 2007-08 mortgage crisis -- is reportedly betting against NVIDIA and Palantir. Despite all this, Pichai himself appears largely unfazed. "We can look back at the internet right now. There was clearly a lot of excess investment, but none of us would question whether the internet was profound," he told the BBC. "I expect AI to be the same. So I think it's both rational and there are elements of irrationality through a moment like this."

Google CEO: "No company is going to be immune" if AI bubble bursts

Why it matters: Investors are increasingly nervous about the health of the AI frenzy, and the sustainability of the trillions in pledged spending in the coming years. What they're saying: If the bubble bursts, "I think no company is going to be immune, including us," Pichai said in what was billed as an exclusive interview. * "We can look back at the internet right now. There was clearly a lot of excess investment, but none of us would question whether the internet was profound," he told the British broadcaster. "I expect AI to be the same." * "So I think it's both rational and there are elements of irrationality through a moment like this." By the numbers: Shares in Google parent Alphabet closed at an all-time high Monday, having risen 51% this year alone. * Despite Pichai's warning, the stock was up another 0.5% in premarket trading early Tuesday. * The company is benefitting from surging demand for AI infrastructure, as well as growing consumer adoption of its own platform Gemini. The bottom line: Investors continue to aggressively buy stocks linked to the AI boom -- but they're also asking more questions about how long it can last. Go deeper: Why the AI economy might not be 1990s redux

Don't blindly trust everything AI tools say, warns Alphabet boss

Sundar Pichai says artificial intelligence models are 'prone to some errors' and warns of impact if AI bubble bursts The head of Google's parent company has said people should not "blindly trust" everything artificial intelligence tools tell them. In an interview with the BBC, Sundar Pichai, the chief executive of Alphabet, said AI models were "prone to errors" and urged people to use them alongside other tools. In the same interview, Pichai warned that no company would be immune if the AI bubble bursts. Since May, Google has introduced an "AI Mode" into its search using its Gemini chatbot, which aims to give users the experience of talking to an expert. Google's consumer AI model, Gemini 3.0, is expected to launch imminently but the company has yet to name a date. Pichai said that while AI tools were helpful "if you want to creatively write something", people "have to learn to use these tools for what they're good at, and not blindly trust everything they say". He told the BBC: "We take pride in the amount of work we put in to give us as accurate information as possible, but the current state-of-the-art AI technology is prone to some errors." There are concerns in Silicon Valley and beyond of a bubble as the value of AI tech companies has increased recently and companies are spending large amounts on the booming industry. Asked whether Google would be immune to the impact of an AI bubble bursting, Pichai said: "I think no company is going to be immune, including us." He added: "We can look back at the internet right now. There was clearly a lot of excess investment, but none of us would question whether the internet was profound. I expect AI to be the same. So I think it's both rational and there are elements of irrationality through a moment like this." Last month the head of America's largest bank said the chance of the US stock market crashing was far greater than many financiers believed. Jamie Dimon, the chair and chief executive of the Wall Street bank JPMorgan Chase, said he was "far more worried than others" about a serious market correction, which he predicted could come in the next six months to two years. Dimon said there were a "lot of things out there" creating an atmosphere of uncertainty, pointing to risks including the geopolitical environment, fiscal spending and the remilitarisation of the world.

'The Big Short' investor Michael Burry on AI bubble: 'There is a Cisco at the center of it all...Its name is Nvidia' | Fortune

Michael Burry has doubled down on his concerns of an AI bubble, drawing similarities between Cisco during the late '90's dot-com crash and one key tech company today. In his first Substack post entitled "The Cardinal Sign of a Bubble: Supply-Side Gluttony" published on Sunday, Burry, who was made famous for his prescience on the 2008 housing market collapse made famous in the 2015 film The Big Short, called the AI boom a "glorious folly," singling out Nvidia as a harbinger for when he expects the industry's bubble to burst. "Folly makes money. Creative destruction and manic folly are exactly why the U.S. is the center of innovation in the world," Burry said. "Companies are allowed to innovate themselves to death. And ever more spring up to do the same. Sometimes the new company is the same company on a pivot." During the dot-com boom, Burry said the tech industry was defined by "highly profitable large caps, among which were the so-called 'Four Horsemen' of the era -- Microsoft, Intel, Dell, and Cisco." Similarly, there are five publicly traded horsemen of the current AI boom, according to Burry: Microsoft, Google, Meta, Amazon and Oracle. Notably, Burry singled out Cisco as the company at the forefront of the dot-com bubble burst. The tech company's stock surged 3,800% between 1995 and 2000, becoming the most valuable company in the world with a market capitalization of about $560 billion. The tech firm's stock collapsed at the turn of the millennium, plummeting more than 80%. Today, Burry argued, history is repeating itself with today's AI boom: "And once again there is a Cisco at the center of it all, with the picks and shovels for all and the expansive vision to go with it," Burry said. "Its name is Nvidia." Burry has published a flurry of X posts casting doubt on the ballooning valuations of AI companies, in particular Nvidia, which he has criticized over the actual longevity of its chips, as well as the chipmakers' ability to sustain demand for its products. Earlier this month, Burry's hedge fund Scion Asset Management bought more than $1 billion in put options -- a contract that allows you to profit from an asset sold at a later date -- on Nvidia and Palantir, according to regulatory filings. That's before the investor quietly deregistered Scion just weeks later, effectively resigning from managing others' money. Similar to Cisco's record-breaking market cap 25 years ago, Nvidia has established itself as the world's most valuable company today, worth roughly $5 trillion. The company's swelling value has also concerned Lisa Shalett, Morgan Stanley Wealth Management's chief investment officer, who told Fortune in September she's worried about the industry's "Cisco moment" in the next 24 months. She said the tech companies surrounding Nvidia are "starting to become interwoven," with firms creating a circular financing loop. For example, Nvidia pledged to invest $100 million in OpenAI in September, and announced last week it will invest $10 billion into Anthropic. In return, Anthropic will invest $30 billion to scale its Claude AI model on Microsoft's Nvidia-powered Azure cloud platform. The continuous investments have, in effect, created one giant blob of AI companies passing the same billions of dollars back and forth. Nvidia, for its part, has pushed back against its skeptics. It reported another quarter of blockbuster earnings last week, including a 62% surge in revenue. Chief Financial Officer Colette Kress rebutted Burry's claim about the life of Nvidia's chips, saying in the earnings presentation that the company's hardware is long-lasting and efficient because of its CUDA software system. CEO Jensen Huang dismissed concerns of a bubble and circular funding in a Fox Business Network interview on "The Claman Countdown," saying the company has not doled out any money yet, and that the investments they plan to make are a "tiny percentage" of its revenues. "We reinvented computing for the first time in 60, 70 years," Huang said. "And so all of the computers that have been installed around the world is being modernized to accelerated computing and video GPUs and to artificial intelligence. And so this build-out is going to last us many years to come."

Top Economist Warns That AI Data Center Investments Are "Digital Lettuce" That's Already Starting to Wilt

AI chipmaker Nvidia beat Wall Street expectations this week, announcing soaring revenues while downplaying growing fears of an AI bubble. The company's chips have been at the center of the ongoing AI boom, with AI companies' valuations soaring to astronomical levels while their revenues continue to lag far behind. Despite plenty of shakiness in the market, investors still firmly believe that the trillions of dollars companies like OpenAI, Microsoft, and Oracle are planning to spend on AI infrastructure buildouts will one day deliver a return. But at the same time, economists are warning that those investors are overlooking some glaring problems with their plans to pile graphics processing units into enormous data centers to train and run immensely power-hungry AI models. For one, all of that hardware is degrading fast while running around the clock. "You're investing in something that is a perishable good," economist and author David McWilliams told Fortune, calling AI hardware "digital lettuce" that's "going to go off now." Worse yet, GPUs could also become obsolete as the technology improves. "Technological change suggests that if you buy a GPU today, the chip is going to be outdated next year," McWilliams added. To McWilliams, it's a recipe for disaster. He argues that the AI trade is "undoubtedly going to crash" -- and points out that the tech isn't creating any jobs, either. McWilliams isn't the first to point out some eyebrow-raising accounting in the sector. Michael Burry, who famously shorted the US housing market before its collapse in 2008, similarly argued earlier this month that AI companies' projected growth could be massively exaggerated, accusing them in a November 10 tweet of assuming it will take far longer for AI hardware to depreciate to boost the numbers. "By 2028, Oracle will overstate earnings 26.9 percent, Meta by 20.8 percent, etc.," he wrote. "But it gets worse," he added cryptically. "Companies are always upgrading their servers and networking gear and chips, so it isn't a new factor, but we haven't seen it at this kind of scale before," Ameriprise Financial Services chief market strategist Anthony Saglimbene told Bloomberg. "That's what is making investors nervous." While aging computer chips may feel inconsequential at first blush, they represent the beating heart at the core of the current AI hype. Firms have bet that scaling up these data centers will result in more capable AI models, a major assumption that experts are starting to challenge. But even if the AI bubble were to crash, McWilliams is optimistic about the US economy surviving it largely unscathed and remaining the center of innovation. Others, however, have a far more grim outlook, warning of a potential collapse that could send ripples through the financial market.

Nvidia says there's no AI bubble. Investors agree -- for now

On Wednesday afternoon, Jensen Huang looked straight at the market's favorite anxiety and waved it off. "There's been a lot of talk about an AI bubble. From our vantage point, we see something very different," the Nvidia CEO told analysts on the quarter's earnings call as he walked through $57 billion in quarterly revenue, a $65 billion forecast, and sold-out cloud GPUs. By the time he hung up, the stock was up over 6% in after-hours trading, analyst blasts were landing in inboxes with subject lines such as "AI Bubble Who?" with notes that they'd raised their earnings forecast (again), and even the people paid to worry about excess for a living sounded oddly relieved to let Huang win the argument -- at least for one more quarter.

Nvidia's Stellar Quarter Fails to Quell Bears as AI Valuation Fears Deepen on Wall Street - Decrypt

Pure-play AI software firms such as C3.ai were hit hardest, underscoring doubts about business models without established cash flows. Wall Street's conviction in the long-term potential of artificial intelligence faced its sternest test this week, and the markets delivered a complex, yet clear, message: high valuation anxieties trump fundamental strength. Despite Nvidia Corp. reporting blockbuster fiscal third-quarter earnings that easily surpassed consensus estimates, the market's reaction demonstrated that valuation concerns and uncertainty about the sustainability of the AI boom continue to hold investor sentiment firmly in bearish territory. The chipmaker, whose graphics processing units are the essential bedrock of the current AI revolution, reported revenue of $57 billion late Wednesday, exceeding expectations and issuing similarly robust guidance for the current period, projecting fourth-quarter sales of $65 billion. The results, fueled by seemingly insatiable demand from hyperscalers like Google parent Alphabet and Microsoft, should have ignited a sector-wide rally. Instead, the surge proved short-lived. Nvidia's stock, which initially jumped in after-hours trading and opened sharply higher on Thursday, rapidly reversed course, closing the session down approximately 3.15%. The dramatic reversal in the market's AI bellwether dragged the entire technology sector down with it, contributing to a 2.2% plunge for the tech-heavy Nasdaq Composite Index that day. The week's action was a stark manifestation of a broader debate raging among institutional investors: whether the multi-year AI rally has inflated into a speculative bubble. This skepticism is evidenced by a noticeable market rotation into defensive sectors. Throughout November, professional fund managers have been moving capital out of high-growth technology and AI-adjacent stocks and into sectors like healthcare, which have substantially outperformed the broader market. Tech, meanwhile, has been the S&P 500's worst-performing sector this month. Other key AI infrastructure plays followed Nvidia's slide. Rival Advanced Micro Devices (AMD) slumped nearly 8%, and other chipmakers contributed to the sell-off, with the PHLX Semiconductor Index declining nearly 5% on Thursday. The bearish sentiment was particularly painful for pure-play AI software vendors, many of which lack the established cash flows and diverse revenue streams of the Big Tech titans. C3.ai Inc. (AI), a prominent enterprise AI application provider, saw its stock price decline over the five-day period, underscoring the vulnerability of companies whose entire valuation rests on the promise of rapidly scaling AI revenue. The stock began the week trading around $13.44 per share but retreated steadily and was down 5% over the past five days, according to Yahoo Finance. This decline means C3.ai's shares are down more than 26% in the past month, a sign that investors are reassessing the risk associated with its current business model ahead of its December earnings report. The company faces stiff competition from major cloud providers now aggressively pushing their own AI platforms, and concerns remain regarding the long path to profitability for enterprise AI solutions. The divergence between Nvidia's underlying business strength and the stock market's lukewarm reception illustrates that while the AI revolution is undoubtedly real, investors are no longer willing to underwrite the sector's current valuations without clearer signs of sustained, broad-based commercialization -- outside of the largest cloud and chip companies.

Google CEO's warning about the AI bubble bursting: 'No company is going to be immune, including us'

With one of the world's top bankers, ex-Intel CEO Pat Gelsinger, and even OpenAI chief Sam Altman suggesting AI is in a bubble, Google's CEO has chimed in with thoughts of his own. When asked how the AI bubble bursting would affect Google Pichai tells the BBC the company would survive, but also that "no company is going to be immune, including us." In an interview with the British news organisation Google's Sundar Pichai talks at length about this technology as we enter "clearly the era of AI." Pichai has been the CEO of Google for over a decade now, and as such, he is one of the most influential voices in favour of the rise of generative AI tools. Google, alongside all its competitors, is committing a lot of time, money, and effort into the growth of AI. Pichai says, "AI is dramatically increasing demand for energy", adding that "maybe four years ago, Google was spending less than 30 billion dollars per year. This year, that number is going to be over 90 billion dollars." With exponential growth comes the potential of that growth stopping suddenly, and the industries built around it collapsing in response. Nvidia has become a company worth over $5 trillion, and that's partially due to the rise of AI and the costs of capable hardware. This knock-on effect has pumped up the worth of major AI companies, such as OpenAI, and would explain the AI commitments made by Google, Microsoft, Meta, and more. "No one company should own a technology as powerful as AI," says Pichai. "We can look back at the internet right now. There was clearly a lot of excess investment, but none of us would question whether the internet was profound or did it drive a lot of impacts. It fundamentally changed how we work digitally, as a society. I expect AI to be the same." But even successful industry bubbles can pop. For instance, the infamous dot-com bubble of the late '90s could be attributed to a broad trend of overvaluations of many internet companies and market saturation (among other things), but that doesn't mean that the invention of the internet isn't influential on the world around us today. Pichai also talks about the role of generative AI tools in the wider world going forward. 'Agentic' is the current buzzword around AI, and the notion of one AI that can autonomously complete assignments with little oversight is certainly intriguing. "Down the line, that means there are moments it can help you make a decision... ' should I invest in this stock?'... or 'my doctor is recommending a treatment. How should I think about the pros and cons of that treatment?" But Pichai doesn't envision AI as a one-stop solution for all queries. He urges people not to "blindly trust" AI as it is currently prone to errors. AI is known to have hallucinations, where it effectively makes things up. If you ask a chatbot a question it doesn't have an answer for, or it has scraped its answer from inaccurate sources, it can feed you misinformation unintentionally. As we trust these tools more, the effects of that misinformation can become more pronounced. "This is why people also use Google search, and we have other products that are more grounded in providing accurate information." When asked, "Could an AI agent do your job at some point?", Pichai says, "I think what a CEO does is maybe one of the easier things for an AI to do one day." So, at least if AI does take all our jobs, we'll all be job hunting together. Or not, I suppose, if Pichai's estimated net worth is accurate.

And...breathe out! The global economy survived NVIDIA's Q3 numbers and the AI bubble didn't burst (yet)

Relax! NVIDIA came up trumps with its quarterly earnings and so the global economy isn't collapsing, at least for another three months or so. Or as CEO Jensen Huang notes smugly: There has been a lot of talk about an AI bubble. From our vantage point we see something very different. That's a vantage point from the perspective of a 62% year-on-year revenue increase to hit $57 billion. Net income came in at $31.9 billion. Huang says that NVIDIA was in the right place at the right time: The world is undergoing three massive platform shifts at once. The first time since the dawn of Moore's Law, NVIDIA is uniquely addressing each of the three transformations. The first transition is from CPU general purpose computing to GPU accelerated computing and Moore's Law slows. The world has a massive investment in non-AI software from data processing to science and engineering simulations, representing hundreds of billions of dollars in compute -- cloud computing spend each year. Many of these applications, which ran once exclusively on CPUs are now rapidly shifting to CUDA GPUs. Accelerated computing has reached a tipping point. Secondly, AI has also reached a tipping point and is transforming existing applications while enabling entirely new ones. For existing applications, generative AI is replacing classical Machine Learning in search ranking, recommender systems, ad targeting, click-through prediction to content moderation. The very foundations of hyperscale infrastructure. Meta's GEM, a foundation model for ad recommendations trained on large-scale GPU clusters exemplifies this shift. In Q2, Meta reported over a five percent increase in ad conversions on Instagram and a three percent gain on Facebook feed driven by generative AI-based GEM. Transitioning to generative AI represents substantial revenue gains for hyperscalers. Now a new wave is rising, agentic AI systems capable of reasoning, planning and using tools from coding assistance like Cursor and Claude Code to radiology tools like Aidoc, legal assistants like Harvey and AI chauffeurs like Tesla FSD and Waymo. These systems mark the next frontier of computing, the fastest-growing companies in the world today, OpenAI, Anthropic, xAI, Google, Cursor, Lovable, Replit, Cognition AI, OpenEvidence, Abridge, Tesla are pioneering agentic AI. So there are three massive platform shifts. The transition to accelerated computing is foundational and necessary, essential in a post-Moore's Law era. The transition to generative AI is transformational and necessary, supercharging existing applications and business models. And the transition to agentic and physical AI will be revolutionary, giving rise to new applications, companies, products and services. That's all good for NVIDIA, he added: When you look at the totality of the spend, it's really important to think about each 1 of those layers. They're all growing. They're related, but not the same, but the wonderful thing is that they all run on NVIDIA GPUs. Simultaneously, because the quality of the AI models are improving so incredibly. The adoption of it in the different use cases, whether it's in code assistance, which NVIDIA uses fairly exhaustively, and we're not the only one. I mean, the fastest-growing application in history, a combination of Cursor and Claude Code and code -- OpenAI's Codex and GitHub CoPilot. These applications are the fastest-growing in history. Still, everything still hinges on an alarmingly small number of mega-customers. In the latest quarter, 61% of revenue came from four clients - and the dependency is increasing, up from 56% three months ago. The company is also spending nearly half of its revenue - $26 billion - renting its own chips back from its customers, over twice as much as it did three months ago. Relax, says Huang: Using cash to fund our growth, no company has grown at the scale that we're talking about and have the connection and the depth and the breadth of supply chain that NVIDIA has. The reason why our entire customer base can rely on us is because we've secured a really resilient supply chain, and we have the balance sheet to support them. When we make purchases, our suppliers can take it to the bank. When we make forecast and we plan with them, they take us seriously because of our balance sheet. We're not making up the off-take. We know what our off-take is, and because they've been planning with us for so many years, our reputation and our credibility is incredible. And so it takes really strong balance sheet to do that, to support the level of growth and the rate of growth and the magnitude associated with that. That said, he chose to point to NVIDIA's relationship with OpenAI as a proof point of long-term fiscal stability. That's OpenAI that has yet to turn a profit and is itself the subject of lots of nervous speculation of a 'bubble bursting' nature. Nonetheless Huang said: I delivered the first AI supercomputer ever made to OpenAI. And so we've had a close and wonderful relationship with OpenAI since then. And everything that OpenAI does runs on NVIDIA today. So all the clouds that they deploy in, whether it's training and inference runs NVIDIA and we love working with them. The partnership that we have with them is one, so that we could work even deeper from a technical perspective so that we could support their accelerated growth. This is a company that's growing incredibly fast. And don't just look at what is said in the press, look at all the ecosystem partners and all the developers that are connected to OpenAI, and they're all driving consumption of it. and the quality of the AI that's being produced, huge step-up since a year ago. And so the quality of response is extraordinary. So we invest in OpenAI for a deep partnership in co-development to expand our ecosystem and support their growth. And of course, rather than giving up a share of our company, we get a share of their company. And we invested in them, in one of the most consequential once-in-a-generation companies that we have a share of. And so I fully expect that investment to translate to extraordinary returns. Overall, Huang pitches that he is confident NVIDIA is on top of potential constraints on future growth: When you're growing at the rate that we are and the scale that we are, how could anything be easy? What NVIDIA is doing obviously has never been done before. And we've created a whole new industry. Now on the one hand, we are transitioning computing from general purpose and classical or traditional computing to accelerated computing and AI. That's on the one hand. On the other hand, we created a whole new industry called AI factories. The idea that in order for software to run, you need these factories to generate it, generate every single token instead of retrieving information that was pre-created. And so I think this whole transition requires extraordinary scale. And all the way from the supply chain. Of course, the supply chain, we have much better visibility and control over because obviously, we're incredibly good at managing our supply chain. We have great partners that we've worked with for 33 years. And so the supply chain part of it, we're quite confident. Now looking down our supply chain, we've now established partnerships with so many players in land and power and shell. Huang concludes: None of these things are easy, but they're all attractable and they're all solvable things. And the most important thing that we have to do is do a good job planning we plan up the supply chain, down the supply chain. We have established a whole lot of partners. And so we have a lot of routes to market. And very importantly, our architecture has to deliver the best value to the customers that we have... I think that we're more successful this year at this point than we were last year at this point. The number of customers coming to us and the number of platforms coming to us after they've explored others, is increasing, not decreasing. And breathe out...for now. See you back here in three months time for another round of 'will the bubble burst?'.

Nvidia CEO says the company is in a no-win situation amid AI-bubble chatter, leaked meeting reveals | Fortune

"The market did not appreciate our incredible quarter," Huang said on Thursday, less than 24 hours after Nvidia reported another set of record earnings and said it had "visibility" into half a trillion dollars of revenue lined up for the rest of 2025 and 2026. Instead of rewarding the beat, investors delivered a shocking reversal that saw shares briefly rising Thursday before turning lower, dragging down the broader AI trade by the end of the session. Huang said expectations around Nvidia have become so extreme that Wall Street now sees danger in both directions. "If we delivered a bad quarter, it is evidence there's an AI bubble. If we delivered a great quarter, we are fueling the AI bubble," he told employees. "If we were off by just a hair, if it looked even a little bit creaky, the whole world would've fallen apart." The comments offer a rare glimpse into how the face of the AI boom views the growing backlash to it, and how closely he is watching the market's whiplash response. On paper, Nvidia gave investors about everything they had asked for. The chipmaker reported another surge in sales of its data-center processors, the workhorses that power large AI models (and Nvidia's revenues), and raised its guidance for the current quarter. It was the kind of performance expected to kick off another six-month rally, investors were saying. Instead, the stock's initial jump gave way to a broad selloff. Nvidia climbed as much as 5% early in Thursday's session before closing down roughly 3%, as traders rotated out of the Big Tech names most closely associated with the AI boom. The reversal extended what has become a bruising stretch for the so-called AI trade. After months of a breathless rally, investors are increasingly anxious that tech giants are spending too aggressively on data centers, GPUs, and networking gear, with no guarantee they can earn enough revenue to get those investments back. Some are also focusing on the complex, debt-heavy financing structures behind the AI infrastructure build-out, with credit markets starting to flash early warning signs. Layered on top of that are fresh macro jitters. A shutdown-delayed U.S. jobs report, released the same morning, showed stronger-than-expected hiring in September, but a higher unemployment rate; this conflicting data did little to clarify whether the Federal Reserve will cut interest rates in December. Some investors are closely watching different statements from Fed presidents to try to read the tea leaves, but with the earnings season winding down and no obvious catalyst between now and the Fed's next decision, it appears that many other investors are using the volatility to lock in profits from the year's earlier rally -- and get out of the market. "The broader narrative hasn't broken; it's simply being tested right now," Mark Hackett at Nationwide told Bloomberg. "Periods like this often act as a release valve rather than signaling a true trend reversal. Inside Nvidia, Huang suggested no one should be surprised that investors are jumpy when so much of the AI story is being projected onto a single company. He referenced online memes that jokingly describe Nvidia as the linchpin of the global economy and the only thing standing between the U.S. and recession. "Have you guys seen some of them?" he asked employees. "We're basically holding the planet together -- and it's not untrue." That level of mythos has helped propel Nvidia's market value into the stratosphere, making it the world's most valuable public company. But Huang made clear that it has also turned every earnings day into a high-wire act. "The expectations are so high that if we miss by just a little bit, people think the whole story is broken," he said. Still, Huang pushed back on the idea that Nvidia is responsible for the frothier parts of the AI trade. The company's job, he emphasized, is to build the compute infrastructure others need, not to police how the market prices demand. Amidst the pressure, Huang kept the meeting light with whistling-past-the-graveyard-esqe humor about Nvidia's wild swings. He joked about the "good old days" when the company had a $5 trillion market capitalization, a playful exaggeration of its actual peak valuation -- before noting just how much value has evaporated in recent weeks. "Nobody in history has ever lost $500 billion in a few weeks," he said. "You've got to be worth a lot to lose $500 billion in a few weeks." Huang told employees he was "delighted" by the quarter and proud of their work, stressing the company's underlying business remains strong even if markets are punishing them for it.

Oops! Nvidia's Stock Is Falling Again After Its "Blowout" Earnings Report

On Wednesday night, Nvidia released its highly anticipated-slashed-dreaded quarterly earnings report -- and Wall Street let out a sigh of relief, at least initially. The multitrillion dollar chipmaker at the center of the AI boom reported a ludicrous $57 billion in quarterly revenue, netting it nearly $32 billion in profit. Compared to the same quarter from the year before, it amounted to a 62 percent surge in sales, and a further 65 percent increase in profit. Nvidia's stock spiked by over four percent when trading resumed on Thursday morning. Other tech stocks received a boost, too, as did the S&P 500 overall. The chipmaker's "blowout" quarter calmed fears of an AI bubble bursting on the horizon. If the nearly $5 trillion behemoth responsible for providing the hardware used by AI makers was still seeing its profits balloon, then perhaps the economy collapsing wasn't in the cards just yet, and everyone could feel secure about pouring more money into AI. But the fuzzy feelings didn't last. While headlines were still trickling out today about the stock market's rally in the wake of Nvidia's awesome third quarter, Nvidia's stock did a swift 180, plunged again, and is now down by over 4 percent over the course of the day. And once again, other tech stocks followed. Microsoft shares are now down by 1.6 percent, and Google's by around 1 percent, even though it just released its hot new Gemini 3 AI model. Perhaps cooler heads finally prevailed. In reality, the fact that the company which is selling all the shovels for an AI gold rush is doing well doesn't really reflect on the prospects of the companies who are actually mining for all that elusive gold. "The people who are selling the semiconductors to help power AI doesn't alleviate the concerns that some of these hyperscalers are spending way too much money on building the AI infrastructure," Robert Pavlik, senior portfolio manager at Dakota Wealth, told Reuters. "You have the company that's benefiting it, but the others are still spending too much money." The fizzling stocks also come as the Wall Street analysts lowered their expectations of the Federal Reserve cutting interest rates in December, NBC News noted, due to a better than expected September jobs report. The vicissitudes of the stock market can be cruel. It didn't care, for instance, that Nvidia CEO Jensen Huang had just gloated about Nvidia's earnings. "There's been a lot of talk about an AI bubble," Huang told investors during the earnings call, before stocks started shriveling again. "From our vantage point, we see something very different. As a reminder, Nvidia is unlike any other accelerator. We excel at every phase of AI from pre-training to post-training to inference."

Nvidia defies AI bubble fears but some analysts remain worried

Blockbuster earnings from chip giant Nvidia this week appeared to rebuke concerns about an artificial-intelligence bubble, briefly ending a days-long slump in the stock market. "It's fair to say that Nvidia's results have completely changed the market mood and pushed out any bubble fears for another day," said Jim Reid, a research strategist at Deutsche Bank, in a memo to clients early Thursday morning, just hours after the earnings. But the market went on to offer little reassurance. Shares of Nvidia fell almost 3% in the first post-earnings trading session. The major stock indexes also dropped, underscoring the importance of the technology for Wall Street and the overall economy, which have both come to rely on massive AI spending to propel growth. Nvidia recorded $57 billion in sales over three months ending in October, the company said on Wednesday, setting a quarterly sales record and demonstrating near-bottomless demand for the semiconductors at the heart of AI. Still, critics say such appetite for the building blocks of AI has far outpaced the technology's end uses and financial returns. AI hasn't delivered much profit, they argue, despite up-front costs totaling hundreds of billions of dollars spent on data centers and chips. Proponents strongly disagree, pointing to the rapid adoption of products like ChatGPT and counseling patience as other uses of the technology take hold. To hear them tell it, AI is set to augur a tech transformation like the internet or electricity, meaning the hype will ultimately bear out even if some firms falter along the way. "There is no question that Nvidia will make a bunch of money," Gary Marcus, a professor emeritus of psychology and neuroscience at New York University, who specializes in AI, told ABC News. "There are many questions about where the market is headed after this initial burst of enthusiasm." For his part, Nvidia CEO Jensen Huang rejected AI-related worries during an earnings call on Wednesday. "There's been a lot of talk about an A.I. bubble," Huang said. "From our vantage point, we see something very different." The economy is undergoing a technological sea change that extends beyond generative AI, Huang said, noting the rise of advanced software such as cloud computing as well as AI-driven physical products -- all of which increasingly run on Nvidia chips. "Nvidia corporation is unlike any other accelerator," Huang added. AI spending is expected to total $375 billion this year, jumping to about $500 billion by the end of 2026, UBS Global Wealth Management found in August. For reference, the half-trillion to be spent on AI next year would be roughly equivalent to the gross domestic product of Singapore. The AI boom has helped propel U.S. economic growth. Such spending added a 0.5 percentage point boost to annualized U.S. GDP growth over the first half of 2025, accounting for about one-third of economic activity, Pantheon Macroeconomics said. But analysts fearful of an AI bubble warn of what they consider immense costs, saying energy needs and chip production have saddled the balance sheets of firms developing and operating AI models. Profits may not come for years, if at all, they warn. OpenAI said it expects to begin generating substantial profits in 2030. Speaking to reporters earlier this year, OpenAI CEO Sam Altman acknowledged frenzied investor enthusiasm but signaled confidence about the long-term outlook for the industry. "When bubbles happen, smart people get overexcited about a kernel of truth," Altman said. "Are we in a phase where investors as a whole are overexcited about A.I.? My opinion is yes. Is A.I. the most important thing to happen in a very long time? My opinion is also yes." Tech giants like Amazon and Google retain the capacity to spend without taking on sizable debt, but smaller players require loans, risking credit defaults if the technology fails to deliver on the up-front costs, Marcus said. The potential unpaid loans could strain banks and put pressure on the wider financial system, he added. "A big question is how much the banks have been propping this up: What will the blast radius be?" Marcus said. Proponents of AI say such worries are overblown. They point to the popularity of products like AI chatbot ChatGPT, which boasts about 800 million weekly users. Millions of additional users avail themselves of xAI's Grok, Google's Gemini and Meta's MetaAI. Last year, Apple unveiled AI-fueled tools for its iPhones, Mac and iPad. Some firms are developing a new wave of AI-equipped robots to perform tasks in people's homes and in workplaces like logistics and warehouses. "This is the fastest adoption of any technology by consumers by far," Lynn Wu, a professor of operations, decisions and information at the University of Pennsylvania, told ABC News. "This is a general purpose technology that will be adopted everywhere." The profitability of the technology will be made apparent over time as consumers and businesses identify its best uses, Wu added. "When a general purpose technology -- like electricity or the internet -- is being adopted, firms and people don't know how to use it," Wu said. "We haven't envisioned how to use this paradigm yet." Still, Wu cautioned, an AI bubble likely exists, though it isn't dangerous. Wu compared the current state of the industry to the internet era before the dot-com bubble, when a host of firms went belly up but the technology reoriented the economy and established corporate giants. "If you ask me flat out -- yes or no -- are we in a bubble? The answer is yes," Wu said. "But the bubble isn't necessarily a bad bubble."

Bubble fears ease but investors still waiting for AI to live up to its promise

Fears about the artificial intelligence boom turning into an overblown bubble have evaporated for now, thanks to a stellar earnings report from Nvidia that illustrated why its indispensable chips transformed it into the world's most valuable company. But that doesn't mean the specter of an AI bubble won't return in the months and years ahead as Big Tech gears up to spend trillions of dollars more on a technology the industry's leaders believe will determine the winners and losers during the next wave of innovation. For now, at least, Nvidia has eased worries that the AI craze propelling the stock market and much of the economy for the past year is on the verge of a massive collapse. If anything, Nvidia's quarterly report indicated that AI spending is picking up even more momentum. The highlights, released late Wednesday, included quarterly revenue of $57 billion, a 62% increase from the same time last year. That sales growth was an acceleration from the 56% increase in year-over-year revenue from the May-July quarter. What's more, Nvidia forecast revenue of $65 billion for the current quarter covering November-January, which would be a 65% year-over-year increase. Given Nvidia's forecasts, "it is very hard to see how this stock does not keep moving higher from here," according to analysts at UBS led by Timothy Arcuri. The UBS analyst also said the "AI infrastructure tide is still rising so fast that all boats will be lifted." Nvidia's numbers are viewed through a window that extends far beyond the Santa Clara, California, company's headquarters because its products are needed by a wide range of companies -- including Big Tech peers like Microsoft, Amazon, Alphabet and Meta Platforms -- to build data centers that are becoming known as AI factories. "AI spending isn't just holding up, it's accelerating. That's exactly what the market needed to see," said Jake Behan, head of capital markets for investment firm Direxion. The numbers initially lifted Nvidia's stock price by as much as 5% in Thursday's trading, while other tech stocks tied to the AI spending frenzy also got a boost. But Nvidia's shares and other tech stocks backtracked later in the session as investors found other issues besides AI, such as the government's latest jobs report and the future direction of interest rates. Even with a slight downturn in its stock price amid the broader market decline, Nvidia remains valued at $4.5 trillion, more than 10 times its valuation three years ago when OpenAI released its ChatGPT chatbot, triggering the biggest technological shift since Apple released the iPhone in 2007. Nvidia's rapid rise has turned its CEO Jensen Huang into the chief evangelist for the AI revolution and he sought to use his bully pulpit during a late Wednesday conference call with industry analysts to make a case that the spending to make technology with humanlike intelligence is just beginning. "There's been a lot of talk about an AI bubble. From our vantage point, we see something very different," Huang insisted while celebrating "depth and breadth" of Nvidia's growth. Huang is hardly a lone voice in the wilderness. A recent report from Gartner Inc. estimates that worldwide spending on AI will rise to more than $2 trillion next year, a 37% increase from the nearly $1.5 trillion that the research firm expects to be spent this year. But it remains to be seen if all that money pouring into AI will actually produce all the profits and productivity that proponents have been promising. That leaves the question unanswered if all the real spending that's happening will be worth it. The most recent survey of global fund managers by Bank of America showed a record percentage of investors saying companies are "overinvesting." Big Tech is already so profitable that many of the most successful finance their spending sprees with their ongoing stream of revenue and cash hoards in their bank accounts. But some companies, such as Meta Platforms and Oracle, are relying more heavily on debt to fund their AI ambitions -- a strategy that has raised enough alarms among investors that their stock prices have plunged more dramatically than their peers in recent weeks. Both Meta and Oracle have suffered more than 20% declines in their stock prices since late October. But other Big Tech powerhouses leading the way in AI remain just behind Nvidia and iPhone maker Apple in the rankings of the most valuable companies. Alphabet, Microsoft and Amazon boast market values currently ranging from $2.3 trillion to $3.6 trillion. "It is true that valuations are high and that there is some froth in the market, however, the spending on AI is real," said Chris Zaccarelli, chief investment officer for money manager Northlight Asset Management. "Whether or not the spending turns out to be overdone won't be known for many years." -- AP Business Writer Stan Choe in New York contributed to this story.

Experts Say Nvidia's Earnings Show That AI Is Far From Peaking

In Nvidia's earnings call yesterday, CEO Jensen Huang rejected talk of an AI bubble. Instead, he suggested the technology will lead to a longer transformation, according to Wedbush analyst Daniel Ives. Nvidia exceeded revenue expectations on several counts. It reported $57 billion in revenue, surpassing Wall Street's estimate of $55 billion. The data center division specifically posted $51 billion, a climb from the $49.31 billion analyst prediction. It forecast $65 billion in revenue in the fourth quarter, though analysts expect $61.98 billion. While several tech industry leaders have expressed concern about overheated valuation, Huang said, "From our vantage point, we see something very different." "As a reminder, Nvidia is unlike any other accelerator," he added. "We excel at every phase of AI, from pre-training and post-training to inference." Huang said a few different kinds of AI uses are growing and adding to the investment craze: a shift from general purpose computing to accelerated computing, and transitions to both generative AI and agentic and physical AI. Soon, people will start to look deeper at the technology, rather than focusing on "the simplistic view of what's happening to CapEx and investment," he said. According to Wedbush's Ives, Nvidia is the "one company in the world that is the foundation for the AI Revolution." He said this week was "extremely important" and that it is "a 1996 Moment... and NOT a 1999 Moment." Ives added the recent report supports the idea that we aren't in an AI bubble, but rather entering "Year 3 of a 10-year build out of this 4th Industrial Revolution." Another analyst agreed. Thomas Monteiro, a senior analyst at Investing.com, said Nvidia's data demonstrates the AI era is "nowhere near its peak." "As investors worry that mounting CapEx will force companies to slow their AI adoption cycles, Nvidia continues to prove that datacenter scaling is not optional, but rather the central need for every tech business in the world," he said. The final deadline for the 2026 Inc. Regionals Awards is Friday, December 12, at 11:59 p.m. PT. Apply now.

AI Investors Furious at Suggestion That There's an AI Bubble

Many industry leaders have acknowledged that there's likely a bubble. But as Axios reports, die-hard AI investors are furious at the suggestion. "The reality is, the world's not going to stop and AI is coming, so you have a choice, you could put your head in the sand or you can embrace it," RedBird Capital Partners managing partner Gerry Cardinale said at an Axios event this week. Others downplayed previous comparisons of the AI bubble to the dot-com implosion. "'The bubble' is a pejorative term," Sequoia Capital partner Roelof Botha said at this week's event. "You have so many industries that are relatively ossified and ripe for disruption," he said. "And AI isn't just a new distribution mechanism or a new interface. It is fundamentally a set of capabilities that can upend industries." Not everybody shares that kind of boisterous optimism, at least when it comes to the immediate future. Even Google CEO Sundar Pichai himself made headlines this week after telling the BBC in an interview that "there are elements of irrationality" in the current AI boom. If a bubble were to burst, "I think no company is going to be immune, including us," he said. Hugging Face CEO Clem Delangue similarly said during this week's Axios event that "we're in a [large language model] bubble," renaming the current phenomenon, "and I think the LLM bubble might be bursting next year." However, Delanuge opined that LLMs are "just a subset of AI." After a bruising couple of weeks, the stock market rallied on Wednesday ahead of AI chipmaker Nvidia's earnings call, an anxiously-awaited litmus test that has made investors skittish as it approaches. "They're going to come in great, I suspect, but if they don't, then there's going to be a problem," Certuity chief investment officer Scott Welch told CNBC of Nvidia's earnings. The S&P 500 jumped in early trading, but has since stabilized substantially lower than its late October record high. But given the widespread discussions surrounding an AI bubble, investors are bound to ask some hard questions, given the now enormously expensive shares of tech companies. "People are just starting to ask the question, as they should, 'You guys are committing to spending trillions of dollars into your data centers and your AI capabilities and everything else, when are we going to see the results of that?" Welch told CNBC. "It's not a question that they're doubting them." "It's just that it's a question of timing," he said, adding that the AI trade "may not go to the Moon tomorrow."

No Company Is Immune: Google CEO Sundar Pichai on AI Bubble Bursting

However, its full-stack operations could help it ride the wave Google CEO Sundar Pichai reportedly addressed the growing concerns around the artificial intelligence (AI) bubble and its possible impact. As per the report, Pichai highlighted that no company in the world will be immune if the bubble really bursts. This is the first time the company has officially acknowledged that the massive investments being made in the AI space might not return a net positive, and the increasingly inflated market valuation could result in a crash. The CEO also warned individuals not to trust everything an AI chatbot tells them. Google CEO on the AI Bubble The term AI bubble has floated a lot recently. With both institutional and private investors being bullish on the technology, a large number of startups have mushroomed in this space and have successfully secured large funding. Many market analysts have raised concerns over this behaviour. Most recently, Jamie Dimon, the CEO of JPMorgan Chase, told BBC that the rising US stock market concerns him as it is not sustainable. He also claimed that some of the money being invested in this space was bound to be lost. On Tuesday, Pichai shared a similar sentiment during an interview with BBC. Talking about the investments made in the space, he reportedly mentioned that there was some "elements of irrationality" in them. He also compared the market boom with the dotcom bubble crash in 2000, and said that despite some bad investments, the overall impact of the technology was profound, BBC quoted him as saying. He was also asked whether massive corporations such as Google should consider themselves immune in case the AI bubble bursts. "I think no company is going to be immune, including us," he told the publication. However, he reportedly highlighted that since the tech giant operates a full-stack, where everything from the infrastructure to the end-consumer delivery is being controlled by a single entity, Google might be able to ride the wave even despite a crash. Sundar Pichai Warns Against Trusting AI Blindly During the same interview, Pichai also tackled the subject of AI hallucinations. Hallucinations refer to scenarios where an AI model falsely conjures information in response to a query and pretends it is correct. The Google CEO reportedly acknowledged that AI can be prone to errors, and it is not wise to just blindly trust whatever they say. Instead, he reportedly suggested any critical information coming from a chatbot should be verified using other tools at disposal. He reportedly added that if people wanted to learn the right way to use AI tools, they would "have to learn to use these tools for what they're good at, and not blindly trust everything they say."

Why Nvidia's Enduring Momentum Isn't Easing A.I. Bubble Concerns

Profit-taking and cautious sentiment drive volatility, even as Nvidia's long-term growth outlook remains robust. What a difference a day can make. Nvidia shares surged on Wednesday after the chip giant reported better-than-expected earnings and guidance, defying growing talk of an A.I. bubble and high-profile exits from investors like Peter Thiel. But just 24 hours later, Wall Street's A.I. darling nosedived more than 3 percent yesterday (Nov. 20) as hopes for another interest rate cut this year faded following a hotter-than-expected September jobs report. Sign Up For Our Daily Newsletter Sign Up Thank you for signing up! By clicking submit, you agree to our <a href="http://observermedia.com/terms">terms of service</a> and acknowledge we may use your information to send you emails, product samples, and promotions on this website and other properties. You can opt out anytime. See all of our newsletters Those renewed rate concerns, combined with lingering fears that A.I. stocks are dangerously overpriced, triggered a sharp market reversal. The Dow erased a 700-point gain to finish down 386 points yesterday, while the Nasdaq fell 486 points and the S&P 500 dropped 103. "NOT a bubble" Nvidia reported total revenue of $57 billion for the August-October quarter, beating analysts' expectations of $55 billion, with EPS of $1.30 versus the predicted $1.26. The company predicted that sales for the current quarter ending January should reach about $65 billion, above Wall Street's consensus of $61.7 billion. Wedbush analyst Dan Ives praised the results, arguing they show the A.I. boom remains solid. He pointed to Nvidia's $2 billion data-center revenue beat and strong demand for its upcoming Blackwell and Rubin chips. He reiterated his view that the A.I. build-out is still in its early stages, with tech giants -- or "hyperscalers" such as Google, Meta and Microsoft -- expected to spend between $550 billion and $600 billion next year to accelerate A.I. adoption. "The pure Nvidia numbers/guidance and strategic vision show the A.I. Revolution is NOT a Bubble...instead it's Year 3 of a 10-year build out of this 4th Industrial Revolution in our view," Ives said in a client note this week. Why notable investors are dumping Nvidia stock Still, after Thiel sold his $100 million stake in Nvidia -- joining other major sellers like SoftBank, which recently unwound $5.8 billion -- some investors began to wonder whether Nvidia and the broader A.I. trade may be approaching a plateau. Concerns over lofty valuations have grown louder, particularly from famed short-seller Michael Burry, who has a $187 million short position against Nvidia. Burry has accused Oracle, Meta, Amazon and Google of understating depreciation for their A.I. infrastructure to inflate earnings through 2028. Joseph Schuster, CEO and founder of ETF operator IPOX Schuster, said recent selling looks more like profit-taking than a sign that an A.I. bubble is ready to burst. "The market is rotating, consolidating and digesting huge gains," he told Observer, noting that investors are in a "risk-off market" for the rest of the year. "It doesn't mean that something will burst or fall apart. It's a normal part of the cycle." Schuster doesn't expect a dot-com-style correction and remains optimistic about the A.I.'s long-term fundamentals, but he said Nvidia and other big tech names could see more downside in the weeks ahead. Nvidia, specifically, could slip to the $165-$170 range, he said. Jane Edmondson, head of thematic strategy at ETF research firm VettaFI, agreed. "I have been in bubbles before, and it does seem different this time," she told Observer. "I do feel like we are still very early days and only just now starting to see [A.I.] use cases that could be groundbreaking." "If you look at Nvidia's order books, they are very strong and Huang expects lots of business to come, and I agree with him," she added. She rejected views that Nvidia's price-to-sales (P/S) ratio of 30x is unsustainable, saying, "I have never seen companies achieve this level of growth. It's exponential." As the market matures, Edmondson said, the winners and losers will become clearer. She expects firms with their own growth capital -- such as Google, Meta and Alphabet -- to emerge stronger than those that rely heavily on leverage.

Nvidia market value skyrockets 300% in last 2 years but Silicon Valley's $3 trillion AI push may backfire - here's what experts are saying

AI bubble warning 2025: Nvidia's chief executive, Jensen Huang, has become the face of the AI boom, as the chip giant's market value has surged 300% over the past two years and sespite this massive rise, Huang sought to clam investor fears on a recent earnings call, acknowledging widespread chatter about an AI bubble but insisting the company sees things differently. Huang told shareholders, "There's been a lot of talk about an AI bubble. From our vantage point, we see something very different," as quoted by a report. Investors and tech executives across Silicon Valley have echoed a mix of optimism and caution. David Sacks, White House AI adviser and venture capitalist, called the current AI surge an "investment super-cycle," while Silicon Valley luminary Ben Horowitz said concerns about future demand are "absurd," as per a NPR report. JPMorgan executive Mary Callahan Erdoes also dismissed bubble fears, describing the wave of AI spending as the start of a "major revolution" in corporate operations, as per the report. ALSO READ: What triggered Bitcoin's $800 billion crash? Experts reveal the major reasons behind the BTC USD meltdown Yet not all voices are as bullish. Paul Kedrosky, a venture capitalist and research fellow at MIT, warned that much of the AI frenzy is speculative. He explained, "The technology is very useful, but the pace at which it is improving has more or less ground to a halt," adding, "So the notion that the revolution continues with the same drum beat playing for the next five years is sadly mistaken," as quoted by NPR. The scale of the financial bets is huge. Companies like Amazon, Google, Meta, and Microsoft are expected to collectively spend around $400 billion on AI this year alone, primarily on data centers, as per the report. According to Goldman Sachs analysts, hyperscaler companies have taken on $121 billion in debt over the past year, more than triple the industry's typical debt load, to finance this infrastructure build-out. ALSO READ: Thanksgiving week market watch: Stocks, crypto & bonds brace for September retail sales, PPI, jobless claims and key economic data Some of these investments are structured through complex financial arrangements known as special purpose vehicles, allowing companies like Meta to fund massive data centers without showing the debt on their balance sheets. While this strategy provides computing power without immediate balance sheet strain, experts like Gil Luria from D.A. Davidson warns that it carries risks reminiscent of past financial excesses. He pointed out that, "If we get to the point after spending hundreds of billions of dollars on data centers that we don't need a few years from now, then we're talking about another financial crisis," as quoted by NPR report. Circular deals between companies also raise concern. Nvidia's $100 billion investment into OpenAI, which is then used to buy Nvidia chips for data centers, has been described as inflating demand artificially. MIT economist Daron Acemoglu warned such deals "eventually reveal a house of cards," as quoted by NPR. Even high-profile investors are signaling caution. Peter Thiel recently sold his entire Nvidia stake worth around $100 million, while SoftBank offloaded nearly $6 billion of its holdings. Hedge-fund manager Michael Burry, famous for predicting the 2008 housing crash, is now betting against Nvidia, questioning the true demand behind AI investments. Is Nvidia in an AI bubble? Some experts warn of a bubble, but Nvidia CEO Jensen Huang believes otherwise. What are circular deals in AI? Deals like Nvidia funding OpenAI, which then buys Nvidia chips, can artificially inflate demand.

Here's What Google's CEO Is Saying About An AI Bubble

With billions flowing into AI and market values soaring, investors and tech CEOs are wondering whether the boom is sustainable, or if a crash is on the horizon. This week, Google CEO Sundar Pichai threw his opinion into the mix. Pichai told the BBC this week that it's possible we are in an AI bubble. He compared this moment to the introduction of the internet. "There was clearly a lot of excess investment, but none of us would question whether the internet was profound or did it drive a lot of impact," Pichai told BBC News. "It's fundamentally changed how we work digitally as a society. I expect AI to be the same. I think it's both rational, and there are elements of irrationality through a moment like this." Pichai said four years ago, Google was spending less than $30 billion annually towards AI. This year it will spend over $90 billion. He said well over $1 trillion is being invested by all companies combined towards "building the infrastructure of this moment." If the AI bubble bursts, no one will be safe, he said. "No company is going to be immune, including us," he said. "If you over-invest, you know, we'll have to work through that phase." Marc Cieslak, AI correspondent, told the BBC that he thinks Google's sizable revenue and diversified products will protect it more than others: "Google is very, very insulated from some of this talk of a bubble, where companies like OpenAI certainly aren't." OpenAI CEO Sam Altman compared AI to the internet, too, saying that people are overly excited now in the same way they were in the 1990s. "When bubbles happen, smart people get overexcited about a kernel of truth," he told The Verge. Meta CEO Mark Zuckerberg is also weighing the possibility of an AI bubble. "I do think that there's definitely a possibility, at least empirically, based on past large infrastructure buildouts and how they led to bubbles, that something like that would happen here," he said on the ACCESS Podcast. Still, he stands by the hundreds of billions that he's said Meta will put into AI superintelligence. "I actually think the risk is higher on the other side," he said. "If you build too slowly... then you're just out of position on what I think is going to be the most important technology that enables the most new products and innovation and value creation in history." The final deadline for the 2026 Inc. Regionals Awards is Friday, December 12, at 11:59 p.m. PT. Apply now.

AI Bubble Worse Than 2008 Financial Crisis Is Brewing, Warns Analyst: 'People Just Don't Want To Listen Because...' - NVIDIA (NASDAQ:NVDA)

Albert Edwards, the Global Strategist at Société Générale, has raised a red flag on the current state of the U.S. equity market. He believes that the market, largely driven by tech and AI, is in the throes of a dangerous bubble that could have dire consequences. Market Growth Masks Deeper Risks Edwards, known for his bearish outlook, drew parallels between the current market situation and the dot-com bubble of the late 1990s. In an interview with Fortune, he pointed to the soaring valuations of tech companies, some trading at over 30 times forward earnings, as a clear sign of a bubble. The analyst also highlighted a key difference in the current scenario: the economy's heavy dependence on the AI theme, not just for business investments but also for consumer spending, which is being driven more than usual by the top quintile of wealthy Americans. This, he warned, makes the economy more vulnerable than during previous bubbles. Despite his track record, which includes accurately predicting the dot-com bubble but also making warnings that didn't materialize, Edwards remains steadfast in his belief that the current situation is alarming. He noted that the U.S. has not experienced a recession since 2008, and this prolonged period of growth has only heightened his concerns. "Generally, when you're gripped by a bubble, people just don't want to listen because they're making so much money." said Edwards. See Also: Shaq Hands Over $100 At His Own Big Chicken Spot -- Then Cashier Inspects To Make Sure It's Real. 'I Know You Just Didn't Check My Money' AI Jitters Lead Stock Market Sell-Off The warning from Edwards adds to a growing chorus of concerns about the state of the U.S. economy, particularly its reliance on AI and tech. Ruchir Sharma, an investor and author, recently suggested that the U.S. economy's heavy reliance on AI could lead to a burst of the AI bubble. Over the past 5 trading days, the S&P 500 fell 1.65%, while NASDAQ declined 2.26%, led by a tech sell-off, despite a blockbuster result from Nvidia Corp. (NASDAQ:NVDA) reflecting investor concerns over the AI bubble. During the same period, Nvidia stock dropped 3.90%, with CEO Jensen Huang reportedly slamming the market's lackluster reaction and expressing his dissatisfaction. Meanwhile, Bill Gates has acknowledged the existence of an AI bubble but has cautioned that it's not comparable to historical bubbles. Additionally, Wedbush analyst Dan Ives reiterated, "This is not an AI Bubble and Nvidia's blowout quarter and bullish demand commentary around Blackwell/Rubin is what we focus on despite this sell-off." READ NEXT: Chamath Palihapitiya Takes A Jibe At Big Short Investor Michael Burry's Hidden Accounting Comments: 'Not Very Good At What He Does' Image via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. NVDANVIDIA Corp$179.990.62%OverviewMarket News and Data brought to you by Benzinga APIs

Nvidia Beat Earnings, but Investors Are Asking the Wrong Question. Here's the Right One. | The Motley Fool

They say the sequel is never as good as the original, but Nvidia (NVDA 0.97%) seems to be proving that wrong. Three years after the launch of OpenAI's ChatGPT, which kicked off the artificial intelligence (AI) boom, Nvidia is still posting blockbuster results and blowing past Wall Street estimates quarter in, quarter out. The AI chip superstar reported revenue of $57 billion in the quarter, up 62% from the quarter a year ago. That actually represented an acceleration from the second quarter, when sales growth had slowed to 56%, and was well ahead of the consensus at $55.1 billion. Notably, that acceleration came without the return of significant revenue from China. Once again, growth in data center revenue, the focal point of the AI boom, was even stronger, up 66% to $51.2 billion. The news helped to quell fears about an AI bubble at a time when tech stocks have been pulling back, especially those that are most exposed to AI, including highly leveraged neocloud operators like CoreWeave and Nebius. Nvidia, which was down 12% from its recent high before the report, jumped 6% on the news, adding $300 billion in market value to approach a $5 trillion market cap again. Bubble, what bubble? Nvidia CEO Jensen Huang didn't shy away from addressing talk of an AI bubble. In fact, he began his remarks on the earnings call by addressing those concerns, saying: "There's been a lot of talk about an AI bubble. From our vantage point, we see something very different." Huang went on to explain the massive investment in non-AI software, and said he sees that shifting away from central processing units (CPUs) to Nvidia graphics processing units (GPUs), arguing that "Accelerated computing has reached a tipping point," and that AI has as well. Nvidia's guidance indicates that its blistering growth will continue into the fourth quarter as the company is calling for revenue of around $65 billion, well ahead of expectations at $62 billion and representing 65% growth from the quarter a year ago, meaning Nvidia's revenue growth would accelerate again in the fourth quarter to 65%. Investors need to zoom out Making Nvidia the avatar of the AI revolution makes sense. After all, Nvidia stock has skyrocketed since the launch of ChatGPT. It's now the most valuable company in the world, at nearly $5 billion, because of AI, and because it continues to dominate the market for data center GPUs and AI compute. However, investors following Nvidia for clues into whether or not there's an AI bubble need to look elsewhere as well. Nvidia's contribution to the AI revolution is essential, but the company is building the rails for the AI boom, and that only counts if people want to ride the trains. In tech, that means the hardware Nvidia provides to run AI software. In order to determine that, the best place to look is at the AI start-ups leading the way, like OpenAI and Anthropic, and CFO Colette Kress pointed to the surging growth at those companies and others, noting a positive virtuous cycle that is leading to increasing adoption and profits. OpenAI and Anthropic are harder to follow because they're privately held, but their numbers back up those claims and should allay concerns of a bubble. OpenAI's valuation has hit $500 billion, but it expects to more than triple its revenue this year, hitting $13 billion, or a run rate of $20 billion. Considering software valuations that are sometimes 25 or 30 times sales, or even higher, OpenAI seems reasonably valued given how fast it's growing. CEO Sam Altman even suggested that the company could hit $100 billion by 2027. Anthropic is in a similar situation, on track to reach run-rate revenue of $9 billion and aiming for $20 billion to $26 billion in run-rate revenue by the end of 2026, making its valuation of $350 billion look fair as well. Adding in Palantir, which has a market cap of $400 billion, the three most valuable software companies are now squarely AI software companies. We're likely to see more of the software value in the tech sector shift to AI, as Huang predicted. As long as companies like OpenAI and Anthropic are doubling or tripling their revenue, concerns of an AI bubble seem overblown. As Nvidia's management explained, a tipping point and a positive virtuous cycle are at hand. Investors shouldn't mistake the problems in the broader economy for cracks in the AI storyline as AI adoption is ramping up rapidly at both the hardware and software levels.

Will U.S economy, S&P 500 collapse if AI gold rush stops?

Seven companies, including Amazon, Microsoft and Alphabet, the parent company of Google, now make up well over a third of the value of the S&P 500 index. Just one of the so-called Magnificent Seven, Nvidia, which makes the chips that power many of the most advanced large language models, recently, though briefly, topped $5 trillion in market value. U.S. economy in 2025 is split in two: Everything tied to artificial intelligence is booming. Just about everything else is not. AI developers and chipmakers are raking in hundreds of billions of dollars in investments. Data centers the size of theme parks are sprouting around the country. By one measure, investments in computer equipment and software accounted for more than 90 per cent of growth in gross domestic product in the first half of the year. And while economists caution against taking those numbers at face value -- if it weren't for AI, some of those dollars would have flowed elsewhere -- they say there is no doubt that AI investments help explain the economy's surprising resilience this year, NYT News Service reported. But reliance on AI as a source of growth poses a question for the economy: What happens if the gold rush stops? That threat is most obvious in the stock market, which has set record after record in recent months largely on the strength of a handful of AI-focused companies. Seven companies, including Amazon, Microsoft and Alphabet, the parent company of Google, now make up well over a third of the value of the S&P 500 index. Just one of the so-called Magnificent Seven, Nvidia, which makes the chips that power many of the most advanced large language models, recently, though briefly, topped $5 trillion in market value. Stock Market Valuations Such lofty valuations are predicated on assumptions that recent rapid growth will continue for years, which some investors have warned could prove unrealistic. Even Sam Altman, the CEO of OpenAI, said in August that he thought investors were too excited about AI. A strong quarterly earnings report from Nvidia on Wednesday failed to fully calm those doubts. A bursting of the bubble -- whenever it happens -- could have real-world implications. Consumer spending in recent quarters has been increasingly driven by high-income households, who have continued to shop even as many lower-income families have pulled back. But if the stock market stumbles, wealthy households, too, might pare down their spending. "If spending growth is being dominated by households that have benefited significantly from the performance of AI-related names in the stock market, then an equity sell-off could be really quite painful for the economy," said Aditya Bhave, a U.S. economist at Bank of America. "That does create a degree of fragility." Lower-income households haven't seen the benefit of the stock market run-up. But they could still be hurt by its reversal. If wealthy Americans spend less on restaurant meals, vacations and luxury goods, that could lead to job losses in the service sector. "If you see a pullback in spending in leisure, in hospitality, in that top cohort, that has knock-on effects," said Michael Reid, an economist at RBC Capital Markets. "That's where I wonder about a downward spiral in the labor market." Investment in AI For now, the boom -- and its lift to the broader economy -- shows little sign of letting up. U.S. companies spent more than $60 billion on computer equipment in the second quarter, up 45 per cent from a year earlier. They spent another $10 billion on data center construction, up 35%. Artificial intelligence probably accounts for most of that growth, economists and industry experts say. Those investments are rippling outward, propping up pieces of the economy outside the traditional technology sector. Caterpillar, typically associated with its bulldozers and backhoes, has seen a surge in sales of its turbines and power-generation equipment, which are used in data centers. Johnson Controls, another industrial conglomerate, has benefited from demand for its cooling and fire-suppression systems. Eaton Corp., which makes power-management systems, has a growing backlog of projects waiting for its equipment. The companies are betting on that growth to continue. Eaton is investing more than $1 billion to expand its manufacturing capacity to meet soaring demand, and this month it said it was spending $9.5 billion to acquire Boyd Thermal, which makes cooling equipment used in data centers. "We are in the very early innings of the AI build-out," Paulo Ruiz, the CEO of Eaton, said in an interview. The two-track nature of the economy is especially clear in the construction industry, which has been battered by high interest rates and tariffs. Nonresidential construction spending fell in August, continuing its downward trend. Homebuilding is well below its pandemic-era peak. Will AI Bubble Burst? Still, many economists and industry experts say the infrastructure-building phase of the AI boom has room to run. Even as data center capacity expands at a record pace, demand is growing just as quickly, and companies are reporting yearslong backlogs. The demand for infrastructure is likely to keep growing, said Paul Ashworth, the chief North America economist at Capital Economics. "It's really only just beginning to get going," he said. "The stock market may be close to a bubble," he added, but there is little sign that the industry has bought too many chips or built too many data centers. For these investments to pay off, however, artificial intelligence will need to fulfill its promise not just as a useful tool, but as a transformational technology that leads to huge increases in productivity. If that doesn't happen? "A lot of the investment that has been put in place might turn out to be unjustified," said Bhave, the Bank of America economist. Q1. What is full form of AI? A1. Full form of AI is Artificial Intelligence. Q2. Who is CEO of OpenAI? A2. Sam Altman is the CEO of OpenAI. (You can now subscribe to our Economic Times WhatsApp channel)

Google CEO Says AI Boom Contains Both Rational and Irrational Elements | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. Pichai said the tech industry can "overshoot" during investment cycles like the one currently happening with AI, the BBC reported Tuesday (Nov. 18). He compared this investment cycle with the one that happened in the early days of the internet. There was "clearly a lot of excess investment" at that time, but the internet was certainly "profound," Pichai said. "I expect AI to be the same," Pichai said. "So I think it's both rational and there are elements of irrationality through a moment like this." Pichai also told the BBC during the interview that if the AI bubble were to burst, every company would be affected, including Google. He added that Google would be better able than other companies to ride out such a situation because Google owns its own "full stack" of technologies, including chips, YouTube data, models and frontier science. These remarks were posted on the same day it was reported that JPMorganChase Vice Chairman Daniel Pinto said that AI valuations need re-examination and that a downturn among AI companies would have a broader impact on the larger stock market. "There is probably a correction there," Pinto said at the Bloomberg Africa Business Summit in Johannesburg, per a Bloomberg report. "That correction will also create a correction in the rest of the segment, the S&P and in the industry." Amazon founder Jeff Bezos said Oct. 3 that the AI boom is an "industrial bubble" rather than a "financial bubble," meaning that even if the sector's share prices collapse, the technology benefits will remain. "Investors have a hard time in the middle of this excitement distinguishing between the good ideas and the bad ideas," Bezos said. "That's also probably happening today. But it doesn't mean that anything that's happening isn't real. AI is real, it's going to change every industry." During the same conference at which Bezos made these remarks, Italian Tech Week, Goldman Sachs Chairman and CEO David Solomon said that a lot of the capital being invested in AI will not deliver returns, but that it's not clear if the tech market is in a bubble. Solomon added that AI will transform work. "We are at the beginning of the movie not the end of the movie," Solomon said. "I wouldn't be surprised if in the next 12-24 months we see a drawdown in equity market but that shouldn't be surprising given the run we've had."

Nvidia CEO Jensen Huang Explains Why the Massive AI Spending Wave Actually Makes Perfect Sense: '... All Of It Justified' - Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL)

On Wednesday, Nvidia Corp (NASDAQ:NVDA) CEO Jensen Huang pushed back on growing concerns that the world is heading toward an AI bubble, arguing that today's massive investments are rooted in a historic shift in how computing itself works. Huang Breaks Down Why AI Demand Isn't Hype Speaking at the U.S.-Saudi Investment Forum in Washington, D.C., alongside Tesla Inc. (NASDAQ:TSLA) and SpaceX CEO Elon Musk, Huang was asked the question everyone has been whispering: Are we in an AI bubble? Huang didn't hesitate. Before answering directly, he urged the audience to "go back to first principles" of computer science to understand what's really happening. The first thing, he said, is that Moore's Law -- the decades-long trend of CPUs doubling in performance -- has effectively run out of steam. The demand for computing is skyrocketing, but general-purpose CPUs can't keep up, Huang said. This has pushed the world toward accelerated computing, powered by GPUs, a shift Nvidia has championed for more than 20 years. He pointed to a striking data point: Just six years ago, CPUs powered 90% of the world's top 500 supercomputers. Today, that has fallen to less than 15%. The rest now run on GPUs. See Also: Jensen Huang Says Being A CEO Is About 'Sacrifice': Nvidia Chief Credits His Mother For Preparing Him For The Road Ahead: She Told Me I Was 'Special' Data Processing And Recommender Systems Are Driving the Shift Huang then said that the world's largest computing workloads have quietly moved to GPUs -- and none of it has anything to do with ChatGPT-style AI. Banks, credit networks, e-commerce platforms and advertisers spend hundreds of billions of dollars annually on data processing alone, he said. Every name, address, age and transaction lives in a data frame -- and computing those data frames fuels the economy," he stated. Then there are recommender systems, which Huang called "the engine of the internet today." From social feeds to shopping suggestions, nearly every digital experience relies on algorithms that already run on GPUs. Agentic AI Is Just the Layer On Top Only after this foundational shift comes the explosion of agentic AI, including models from OpenAI, xAI, Anthropic and Alphabet Inc.'s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google. "If you take that into consideration, you'll come to the conclusion that, in fact, what is left over to fuel that revolutionary agentic AI is not only substantially less than you thought and all of it justified," he stated. Peter Thiel's Nvidia Exit Adds Fuel To Growing Concerns Earlier this month, billionaire Peter Thiel drew attention after unloading his entire stake in Nvidia, the company widely seen as the backbone of the generative AI boom. He also slashed his position in Tesla, reflecting rising unease that machine intelligence may be advancing faster than expected. His move follows a string of other notable sell-offs, adding to the growing sense of investor anxiety. Michael Burry, the famed "Big Short" investor, also sounded the alarm, arguing that today's "Cloud then AI buildout" has triggered a capital spending surge on par with the Dot-Com and housing-market extremes. Meanwhile, AI spending is accelerating rapidly, with U.S. tech giants on track to pour nearly $400 billion into capital expenditures this year and total AI investment projected to reach $5.2 trillion by 2030, according to McKinsey. Nvidia places in the 98th percentile for Growth and the 92nd percentile for Quality in Benzinga's Edge Stock Rankings, highlighting its standout performance against industry peers. Photo Courtesy: jamesonwu1972 from Shutterstock Read Next: David Tepper's Hedge Funds Bets On AMD, Nvidia In Q3, Takes Profits On Intel Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. GOOGAlphabet Inc$299.982.39%OverviewGOOGLAlphabet Inc$299.432.26%NVDANVIDIA Corp$196.005.08%TSLATesla Inc$410.501.61%Market News and Data brought to you by Benzinga APIs

Three billionaires just issued a shocking Nvidia warning

Nvidia, in many ways, is the linchpin of the AI revolution currently underway. Analysts and investors will often look at specific case scenarios of where we are when it comes to AI, but Nvidia's earnings are generally where analysts will start, circling the date in red. However, a tiny number of top investors with very diverse attitudes and goals are now using Nvidia to show that they don't believe in the whole AI boom. They aren't arguing over whether Nvidia's processors are excellent. Michael Burry is perhaps the most blunt of the trio, as Reuters reporting suggested. "Sometimes, we see bubbles," he wrote in a recent post on X (formerly Twitter). He is not the only one who shares this view. A number of prominent investing personalities around the world hold deep-seated reservations regarding the stock, which is perhaps the biggest Wall Street darling right now. Mike O'Rourke, chief market analyst at JonesTrading, told CNN, "I think we're at a tipping point of this bubble." He warned that "very speculative" parts of the market were already starting to fall apart and might "bleed over" into AI giants like Nvidia. Not great news. All of this is a major part of the narrative that perhaps those evaluation Nvidia's earnings need to take a step back, and look at the picture with a more holistic lens. Photo by BRENDAN SMIALOWSKI on Getty Images Nvidia's new role: from AI king to AI proxy For most investors, Nvidia is still the best option to purchase AI. Its GPUs are at the core of the data centers that run OpenAI, Google, Microsoft, and a lot of other companies' testing. That power became the stock the market's AI thermometer. Some of the smartest players are now using that same stock to protect themselves, get out, or even gamble against the boom. Some of the most recent movements are: * Michael Burry's Scion Asset Management bought more than $1 billion in put options on Nvidia and Palantir. * Peter Thiel's Thiel Macro sold all 537,742 Nvidia shares it had, which were valued almost $100 million at the end of the quarter. * SoftBank Group is selling its whole 32.1 million-share holding in Nvidia for around $5.8 billion and using that money to make big expenditures on OpenAI and AI infrastructure. Different tools, different sets of rules, same message: Nvidia is no longer only the best AI company; it is also the market's AI bubble gauge. Michael Burry: shorting the AI capex party Before the filings hit, Burry sent a message about how he felt. That sentence, which he wrote on X, was his first public remark in almost a year. It emerged just when AI excitement and Nvidia's stock price were at their highest. A few days later, Scion revealed that it had more than $1 billion in put options linked to Nvidia and Palantir. This isn't just a little hedge for Burry; it's a big, clear wager that certain areas of the AI trade have gone too far. He doesn't think Nvidia suddenly forgot how to make chips. It's more about what's going on behind the scenes. He has said that huge tech corporations are prolonging the "useful lives" of AI systems on their books. This lowers depreciation costs and makes earnings appear better than they actually are. If the AI upgrade cycle slows down or product cycles become shorter, those assumptions might change, leading to greater costs and lower returns exactly when investors are paying the most for AI exposure. That's why Nvidia is so helpful to him: It's the simplest and easiest way to bet against the concept that AI capital investment can keep growing at this rate without hurting profits. Yet not everyone is on the same page. Palantir CEO Alex Karp pushed back on CNBC, saying: "The two companies he's shorting are the ones making all the money, which is super weird." He went further, saying: "The idea that chips and ontology is what you want to short is bats**t crazy." That fight, a marquee bear against a core AI true believer, is what makes Nvidia a key battleground for AI. Thiel and SoftBank: cashing out the crown jewel Burry is the bear that makes the most noise. Thiel and SoftBank are expressing a message that is less loud but nevertheless vital. Thiel Macro's choice to sell all of its Nvidia shares seems like typical controlled profit-taking. The firm sold its nine-figure stake just as Nvidia hit the $5 trillion mark and speculation of an AI "bubble" grew. Thiel doesn't believe AI is just a passing trend. He has remarked that the technology is "more than a nothing burger" but "less than the total change of our society." In other words, the narrative is true, but the existing price may already include the good news. SoftBank's action is unusual once again. Masayoshi Son didn't simply give up on AI; he used Nvidia's profits to make a big, direct commitment on OpenAI and associated infrastructure. Nvidia turned into a type of golden ATM, where you sell the liquid winning to pay for the next part of the AI bet. Put together, these three signals line up neatly: * Burry treats Nvidia as the AI bubble short. * Thiel treats it as the AI winner that's fully priced. * SoftBank treats it as the AI piggy bank to crack open for earlier-stage upside. What regular investors should take away None of these means that Nvidia is inevitably a "sell." The business is still important to AI, and Wall Street still wants its processors and software. The ways in which smart money uses the stock have changed. Nvidia is evolving from a narrative about growth to a stand-in for the whole AI cycle, with all its potential and problems. For those who invest on their own, it means: * Don't simply think about Nvidia as a single firm; think of it as a leveraged gamble on AI capex. It will change according on how people feel about whether the AI expenditure boom can keep paying off. * Don't think that making a lot of money is enough. When a company becomes a macro asset, positioning and flows may make even good quarterly performance seem small. * Adjust the size and length of your exposure as needed. Nvidia may still reward those who are patient if the AI boom continues going. If the bubble label stays on, it can be the easiest victim. The business case for Nvidia is still strong. Its chips are still the tools of the AI gold rush. But the story has changed. Nvidia is no longer just the hero of the AI rally; it's now the market's opinion on whether that surge was a revolution, a bubble, or a little bit of both. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc. This story was originally published November 20, 2025 at 8:33 PM.

Nvidia CEO Jensen Huang Downplays AI Bubble Concerns: This Is "Very Different" | The Motley Fool

Huang argues that Nvidia's AI boom is grounded in lasting shifts in computing rather than a fragile bubble. Nvidia (NVDA 3.17%) just delivered another blockbuster quarter, and the stock rose about 5% in after-hours trading after its latest results eased some market jitters about a potential AI (artificial intelligence) bubble. On the earnings call, CEO Jensen Huang tackled those worries directly, arguing that big spending in the space is far from a speculative spike, and that demand is rooted in real infrastructure change. The CEO's comments carry weight with investors. After all, the chip designer sits at the center of today's artificial intelligence boom, supplying accelerated-computing platforms for data centers and AI applications. Bubble fears and demand "There's been a lot of talk about an AI bubble," Huang said in the company's fiscal third-quarter earnings call. "From our vantage point, we see something very different," Huang framed this demand as part of a broader transformation in how computing works. "The world is undergoing three massive platform shifts at once," Huang explained, calling it the first time since the dawn of Moore's Law that so many changes are unfolding together. One shift is from general-purpose CPU computing toward GPU-accelerated computing. As Moore's Law slows, customers want more performance per dollar, so moving workloads to Nvidia's accelerated platforms can sharply increase efficiency in areas such as simulations or large-scale data processing. Another shift centers on generative AI. Companies are replacing classical machine-learning systems with generative models inside search and recommendation engines, which can deepen engagement for users and automate more work inside enterprises. Once those models are deployed, serving results to users requires ongoing GPU-powered inference, which helps explain why cloud providers have kept prioritizing AI spending even as other projects wait. A third shift involves what Huang described as agentic and physical AI, where models not only generate content but also plan tasks and interact with the physical world through autonomous systems. That evolution could open up new categories of demand as industries like automotive and healthcare invest in specialized AI infrastructure on top of the cloud buildout already underway. Taken together, the three shifts help explain why Nvidia's order book is so large and why management is comfortable pushing back on bubble talk. The proof is in the numbers Of course, you don't have to just take Huang at his word. Just look at the numbers. People are buying up Nvidia's chips as fast as they can. The company's third-quarter revenue came in at $57.0 billion, up 62% year over year. Data center revenue reached $51.2 billion, up 66% year over year. That performance represented a significant acceleration from the second quarter's 56% year-over-year revenue increase. And this isn't just a revenue story. Nvidia is generating massive profits. Third-quarter net income was $32 billion, up 65% year over year. Management also guided to another substantial sequential revenue increase in the fourth quarter as new Blackwell-based systems ramp. Additionally, the company sees strong growth persisting. "We currently have visibility to a half a trillion dollars in Blackwell and Rubin revenue from the start of this year through the end of calendar year 2026," said Nvidia Chief Financial Officer Colette Kress in the company's third-quarter earnings call. If Huang is right and there are three major platform shifts occurring simultaneously, we may truly be in the early innings of this AI boom -- something that would have implications not just for Nvidia but for other AI beneficiaries in the space, like hyperscalers. Of course, it's not like investors aren't pricing in extraordinary growth from AI. Nvidia itself trades at a price-to-earnings ratio of 45. But considering how fast the company is growing, this is a fair valuation -- not quite bubble pricing. And it's especially not bubble pricing if this infrastructure transformation is just getting started.

Jensen Huang at all-hands meet - Nvidia saved the world, a bad quarter could've broken everything

Nvidia CEO Jensen Huang acknowledged the immense pressure on the company, stating a minor earnings miss could have triggered global AI bubble fears. He highlighted memes portraying Nvidia as holding the planet together, underscoring its critical role. Despite record earnings, Huang noted the challenge of meeting sky-high expectations, a sentiment reflected in stock fluctuations. Nvidia CEO Jensen Huang took the stage at a recent all-hands meeting to address the extraordinary expectations surrounding the company and its role in the artificial intelligence boom, as per a report. During the meeting, Huang described Nvidia as a company so influential that a minor misstep could have had global consequences. Huang spoke about the AI chipmaker's earnings report, saying that, "If we delivered a bad quarter, it is evidence there's an AI bubble. If we delivered a great quarter, we are fueling the AI bubble," as quoted by Business Insider. The Nvidia CEO acknowledged that expectations for Nvidia were sky-high, pointing out that the AI chip giant was in somewhat of a no-win situation, and even highlighted the online chatter that credited the company with helping the US avoid a recession and the economic impact, as per the report. Huang said that, "If we delivered a bad quarter, if we're off by just a hair, if it just looked a little bit creaky, the whole world would've fallen apart,"as quoted by Business Insider. ALSO READ: MSTR crisis: JPMorgan warns major index delisting could hit next after MicroStrategy stock falls 40% as Bitcoin crashes He also referenced the popular internet memes portraying Nvidia as holding the planet together, saying, "There's no question about that, OK? You should've seen some of the memes that are on the internet. Have you guys seen some of them? We're basically holding the planet together -- and it's not untrue," as quoted in the report. While Huang expressed pride and delight over the company's record-shattering earnings and was proud of employees, he admitted that Nvidia's massive influence has made it harder to meet expectations, a challenge reflected in the company's stock performance, which jumped on Wednesday after earnings but fell again on Thursday as confidence in the AI trade wavered, as quoted by Business Insider. ALSO READ: Dogecoin price today: DOGE breaks key support amid crypto crash - what traders must watch next Huang reflected on the company's incredible market swings with a touch of humor. He pointed out the "good old days" when the company had a $5 trillion market cap, and then said, "Nobody in history has ever lost $500 billion in a few weeks," adding, "You've gotta be worth a lot to lose $500 billion in a few weeks," as quoted in the report. Why did Nvidia's stock fall after strong earnings? Investors grew uncertain about the broader AI trade despite the company's record results. Why are expectations so high for Nvidia? Its chips power much of today's AI boom, placing it at the center of global tech hype.

Google CEO drops a bombshell comment on AI bubble

In an ongoing trend, experts often admit that artificial intelligence represents a bubble. While the discussion about the AI bubble began before OpenAI's CEO, Sam Altman, shared his opinion, it seems that he signaled to everyone else that it's okay to talk about it. Altman said in his August interview with The Verge that he thinks we are in an AI bubble: "The internet was a really big deal. People got overexcited. Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes." Mark Zuckerberg also shared what he thinks about a possible AI bubble in an interview on the ACCESS podcast: "I do think that there's definitely a possibility, at least empirically, based on past large infrastructure buildouts and how they led to bubbles, that something like that would happen here." Amazon founder Jeff Bezos has a distinct perspective on the AI bubble. "Bezos sees what's happening now as an 'industrial bubble' more similar to the biotech bubble in the '90s. While many investors lost a lot of money to that bubble, 'We did get a couple of lifesaving drugs,' he said," writes Tony Owusu for TheStreet. Former Intel CEO Pat Gelsinger, in an interview for CNBC's Squawk Box, confirmed that he believes we are in the AI bubble by saying, "Are we in an AI bubble? Of course!" He added that he doesn't see it ending for several years. The time has come for Alphabet (GOOGL) CEO Sundar Pichai to join the group of experts who have expressed their opinion about the AI bubble. Photo by BoliviaInteligente on Unsplash Google CEO says no company will be immune if the AI bubble bursts Pichai began by stating that the excitement for AI is very rational, and like Altman, Pichai compared AI to the internet bubble. "[The internet] fundamentally changed how we work digitally as a society. I expect AI to be the same, so I think it's both rational and there are elements of irrationality through a moment like this," he said in an interview with the BBC. Pichai continued to discuss what would happen if the bubble burst. Marc Cieslak, AI correspondent, told the BBC that Google's diverse business and huge revenue, to some extent, insulate it from some of the talk of a bubble. He added that companies like OpenAI certainly aren't immune. Pichai also discussed AI hallucinations, which are another significant issue with the technology. "We take pride in the amount of work we put in to give us as accurate information as possible, but the current state-of-the-art AI technology is prone to some errors," he said. He continued by saying that people "have to learn to use these tools for what they're good at, and not blindly trust everything they say." Bank of America analysts have also addressed the AI bubble on several occasions and have recently raised the price target for GOOGL stock. Bank of America raises stock price target for Alphabet In a recent research note (from October 30) shared with TheStreet, Justin Post raised his revenue estimates for Alphabet, following the earnings report for Q3 2025. Here are the Alphabet Q3 earnings highlights: * Revenue increased 16% to $102.3 billion year over year (15% in constant currency). * Net income increased 33% to $34.98 billion. * Diluted Earnings per share (EPS) increased 35% to $2.87. Post raised the estimate for Alphabet's 2026 net revenue by 4% to $397 billion and EPS by 4% to $11.13. For 2027, he increased his revenue estimate by 6% to $430 billion and EPS by 7% to $12.51. He reiterated a buy rating for Alphabet stock and raised the price target from $280 to $335, based on 26 multiple his estimates for 2027 core Google GAAP EPS plus cash per share. Post noted downside risks for Alphabet: * Loss of search traffic to AI tools from competitors * LLM integration taking longer than expected or negatively impacting search revenues * Revenue pressure from compliance with the EU Digital Markets Act * Potential for increasing capital expenditures and lower free-cash-flow due to AI investments The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc. This story was originally published November 18, 2025 at 4:00 PM.

Tech leaders at Toronto conference downplay warnings of AI 'bubble'

TORONTO -- The rapid growth of artificial intelligence has led to warnings from some observers of a "bubble" destined to burst, but tech leaders say there's good reason to believe the sector won't suffer the same fate as the dot-com crash of the early 2000s. There are key differences between the application of AI infrastructure still being built and the internet boom of the late 1990s, said Nvidia senior vice-president of networking Kevin Deierling. Back then, everything needed to be built from scratch and companies weren't immediately ready to use the technology. "There was a lag," said Deierling, speaking in Toronto on Wednesday alongside other tech sector executives on the sidelines of the Cisco Connect conference. "All of a sudden I have all this bandwidth for the internet and the dot-com era, but now I actually need Amazon and Uber and Netflix and all of these other businesses." While those use cases did develop over time, Deierling said AI doesn't have to wait decades. He said applications for software built on AI technology "already exist" and companies can take advantage of them right away. "In the dot-com era, by the late 1990s, early 2000s, you started to see inventory build up ... and people were shipping things that actually weren't selling through. We don't see that at all," he said in an interview. "This stuff gets used as soon as it gets built." The hopeful outlook came just hours before the company reported its latest quarterly earnings, potentially easing some analysts' recent jitters. The company posted net income of US$31.9 billion for the third quarter, up from US$19.3 billion a year ago, while revenue rose 62 per cent. Nvidia's sales of the computing chipsets known as graphics processing units -- which are used to help train powerful AI systems like the technology behind ChatGPT and image generators -- surged beyond analysts' expectations. Nvidia, Wall Street's largest stock which briefly topped US$5 trillion in value, has struggled this month, losing more than 10 per cent on the S&P 500 as of Tuesday. The company's stock price rose more than two per cent on Wednesday. Analysts have been closely watching the stock for potential indications of how the AI sector might continue to perform because other companies rely on Nvidia's chips to ramp up their own AI efforts. While stocks linked to AI have been surging for years, there have been mounting concerns that the outsized level of spending in the industry may not lead to as much profit as hoped. Other leaders in the sector also downplayed those worries at Wednesday's conference. Francois Chadwick, chief financial officer for Toronto tech firm Cohere, likened demand for AI to a "constant drumbeat." "There is a real need," said Chadwick in an interview, adding that in the early days of the internet, some tech companies were "building things that no one really even needed or wanted." "Right now, there's the demand, there is the need. Companies, enterprises, governments -- everyone's asking for this." A study released last month found just eight per cent of Canadian organizations qualify as "AI-ready." The CiscoAI Readiness Index said nearly three-quarters of those surveyed in Canada plan to deploy AI agents and 34 per cent expect them to work alongside employees within a year, but few have the secure infrastructure to sustain it. Those that are fully prepared are 50 per cent more likely to see measurable value. Deierling described Canada as "ahead on research and behind on deployment" when it comes to AI usage. "And I don't understand why," he said. "I mean, you have the core capacity, the people that understand this. You have all kinds of businesses that should benefit from this, and so I think it's just a matter of will." But Deierling acknowledged that many companies remain fearful of AI. He said the key is to start out small, often focusing on internal use cases, rather than "risk your entire business on some AI that you may not understand how to implement." "Every company is ready to use AI, they just don't know it," he said. "The risk isn't that high. Deploy something and start using it and what you'll find is that there's so much productivity gains that the demand will just completely drive the next generation." -- With files from The Associated Press

Is Nvidia in an AI Bubble? Here's What Jensen Huang Says. | The Motley Fool

Worries about an AI bubble have weighed on Nvidia stock recently. Nvidia (NVDA 2.99%) stock has roared higher over the past several years as artificial intelligence (AI) emerged as a game-changing technology. The company designs the most powerful AI chips around -- they're known as graphics processing units (GPUs) and are key to the development and use of AI. So, the idea is, if you invest in Nvidia, you'll benefit as this technology revolution marches on. The company has demonstrated this as AI, for the past few years, already has been supercharging its revenue growth. Nvidia has reported double- and triple-digit gains quarter after quarter, and the stock price has taken off too, advancing 1,200% over the past five years. But, as this has unfolded, valuations of Nvidia and other AI players have climbed too, prompting investors to worry about the potential formation of an AI bubble. And this concern has weighed on the S&P 500 and Nvidia in recent weeks -- they declined more than 2% and 7%, respectively, from the start of November through the Nov. 19 market close. Are Nvidia and other AI stocks in a bubble? Here's what Nvidia chief Jensen Huang says. Before we zoom in on Huang's comments, though, let's take a quick look at the current AI picture. Though some investors have worried about an AI bubble, we haven't seen evidence of a slowdown in demand for AI products and services. Tech giants from Amazon to Alphabet and Broadcom all have reported earnings over the past several weeks -- and each one has spoken of high demand for AI products and services. Cloud service providers are building out infrastructure to keep up with this soaring demand -- and this has been driving their revenue growth as well as growth at chip companies such as Nvidia, Broadcom, and Advanced Micro Devices. All of this supports Huang's prediction, delivered a few months ago, for as much as $4 trillion in AI infrastructure spending by the end of the decade. As mentioned, though, as investors piled into AI stocks, valuations climbed. The S&P 500, as seen through the S&P 500 Shiller CAPE ratio, has been trading at one of its most expensive levels ever. And this has prompted some investors to start thinking about the possibility of an AI bubble taking shape. Now, let's consider what Nvidia's Huang has to say about the matter. He, as the leader of a company with great visibility on what's happening next in the AI market, is well-positioned to address this subject. After all, Nvidia is in close contact with its customers as they plan future orders, so the chip giant sees if momentum is slowing or set to continue. Huang, during Nvidia's earnings call on Wednesday, said the following: "There's been a lot of talk about an AI bubble. From our vantage point, we see something very different." The idea is that, though a company such as Nvidia has seen tremendous growth in recent years, we are still in the early days of the AI boom. Huang sees three major shifts in progress: the transition from central processing unit (CPU) computing to GPUs, the broad use of generative AI, and the growing use of agentic AI systems. And these, all requiring AI products and services, should keep powering earnings higher at Nvidia. "Our singular architecture enables all three transitions," Huang added. Nvidia's fiscal 2026 third-quarter earnings reinforce all of this. The company reported a 62% increase in revenue to a record level of $57 billion and maintained high profitability on sales, with gross margin of more than 73%. And the demand picture looks bright too, with Nvidia saying its installed base of GPUs is in use at 100% and "the clouds are sold out." Considering all of this, Nvidia, trading for around 40x forward earnings estimates, looks reasonably priced. So, today, in the wake of Nvidia's earnings report, investors may breathe a sigh of relief as Huang offers evidence that the top AI stock isn't in a bubble -- and instead could continue to deliver growth well into the future as the AI boom evolves.

AI bubble? Four Differences Today vs. 2000 By Investing.com

Investing.com -- Recently, U.S. stocks experienced their sharpest volatility in months, exposing strains in the artificial intelligence trade and prompting renewed debate over whether a speculative bubble is forming. The pullback followed a strong earnings report from Nvidia that failed to lift the broader market, raising questions about the durability of this year's AI-driven gains. However, Evercore analysts argue that today's setup differs meaningfully from the conditions leading into the 2000 dot-com bust. They highlight that cloud capital expenditure (CapEx) has surged substantially, quadrupling from $150 billion in 2023 to a projected $600 billion in 2026, a pace that has stirred comparisons with the telecom buildup of the late 1990s. But the broker highlights four distinctions that, in its view, separate the current cycle from the earlier bubble. Stay ahead of AI-driven market swings and see how analysts are positioning by upgrading to InvestingPro - get 55% off today 1) The first is financial strength. "90% of Cloud CapEx is from well-capitalized companies like Amazon, Microsoft, Google, Meta, Apple, and sovereigns," Evercore analysts write, noting that these tech giants are expected to account for more than 90% of spending by 2026. 2) The second difference is demand. Accelerating inference workloads are now driving investment, a contrast to the "dark fiber" overbuild of 1999. Evercore says cloud bookings are rising in line with CapEx and its checks show inference demand is "about to cross over training as the largest AI compute workload at hyperscalers." 3) Sentiment is another distinction. While today's market is asking "Are we in an AI Bubble?", the analysts recall that investor mood in 1999 was far more euphoric. "In 1999, we recall 9 out of 10 investors being euphoric about the Internet investment cycle," they wrote. 4) Lastly, valuations also look different compared to the 2000 dot-com bust. Leading AI names trade at next-twelve-month (NTM) earnings multiples in the 20s to 40s, far from the 20-40x sales once in communications-chip stocks then. Nvidia, for instance, trades at 22x its 2026 earnings estimate, near levels that marked past cycle bottoms.

ETtech Explainer: Why Nvidia's Q3 results matter for AI & the markets - The Economic Times

Nvidia's latest earnings have boosted stock markets and become a key signal for investors about whether the broader AI industry still has momentum. The company reported $57 billion in revenue, up 62% year-on-year (YoY), with net income rising 65% to nearly $32 billion. Its data centre unit -- which supports global AI demand -- crossed $51 billion, cementing Nvidia's lead in the compute race. Mega chipmaker Nvidia delivered stellar earnings in the third quarter of FY26 that ended in September, reinforcing its position at the centre of the artificial intelligence (AI) boom. Nvidia's latest earnings have boosted stock markets and become a key signal for investors about whether the broader AI industry still has momentum. The Santa Clara-based company reported $57 billion in revenue, up 62% year-on-year (YoY), with net income rising 65% to nearly $32 billion. Its data centre unit -- which supports global AI demand -- crossed $51 billion, cementing Nvidia's lead in the compute race. Tight supply allows Nvidia to keep margins at unusually high levels for a chip manufacturer. Global technology shares rallied Nvidia's stock was up 38.9% in the year, following gains of 171% in 2024 and 239% in 2023, highlighting its extraordinary rally over the past two years. Although tech stocks have been among the worst performers in recent sessions, they have risen significantly in the year. The S&P 500 technology index is trading at roughly 30 times the forward earnings, compared with its 10-year average of 22.2, indicating elevated expectations for future profits, Reuters reported. Investor optimism boosted tech stocks globally, with Advanced Micro Devices and Intel rising roughly 5% and 2%, respectively, while Arm Holdings, Micron Technology, and Broadcom gained between 1% and 3%. In Europe, the tech index advanced 1.2%, led by ASML, which climbed 2.1%. Across Asia, Taiwan Semiconductor Manufacturing Company (TSMC) jumped 4.3%, SK Hynix rose more than 1.6%, and Japan's Nikkei reclaimed the 50,000 level, as chipmakers and AI-related stocks rallied. The group of US technology giants known as the "Magnificent Seven", which includes Nvidia and Meta, has also seen a sharp surge in share prices, raising concerns about how heavily stock market performance now depends on just a small number of companies. In June, Nvidia reclaimed the top spot as the most valuable publicly traded company, surpassing tech giant Microsoft. Nvidia shares rose about 3.4% on June 3, giving it a market value of about $4 trillion, higher than Microsoft's $3.44 trillion. Despite a 3% decline in the session amid broader market weakness, Nvidia is still valued at $4.4 trillion (more than 10 times its worth three years ago, when OpenAI launched ChatGPT), marking one of the most significant technological shifts since Apple introduced the iPhone in 2007. The market values of Alphabet, Microsoft, and Amazon roughly range between $2.3 trillion to $3.6 trillion. Nvidia eases bubble concerns Fears of an AI bubble have eased for now after Nvidia's robust report showed that AI spends are still accelerating. The company has projected $65 billion in revenues (+/- 2%) for the November-January quarter, a 65% YoY increase. The average estimate of analysts was about $61.66 billion, according to data compiled by LSEG. Nvidia's results initially pushed its stock up by as much as 5% on Thursday, with other tech firms linked to the AI boom also gaining. "Bubble risks do need to be considered," said Mark Haefele, chief investment officer, UBS Global Wealth Management, during a call with reporters on the outlook for 2026, per Reuters. During Nvidia's earnings call, CEO Jensen Huang dismissed concerns of an AI bubble, presenting a long-term vision for Nvidia based on three major transitions: moving non-AI workloads to its high-powered chips, creating new AI-driven software categories like coding assistants, and expanding AI into physical applications such as robotics and autonomous vehicles. Growth pillars Nvidia's revenue surge is being driven by large cloud computing companies such as Microsoft, Amazon, Google, and Meta, which are spending tens of billions of dollars building AI data centres. In turn, Nvidia also increased its spending on renting back its own chips from cloud customers to $26 billion, up from $12.6 billion in the second quarter, with contracts extending at least through 2031. In the last quarter, the company said it plans to invest up to $100 billion in OpenAI and $10 billion in Anthropic, two of its largest customers. Earlier this month, data centre owner and operator IREN signed nearly a $9.7 billion cloud services contract with Microsoft to provide the tech giant with access to Nvidia's GB300 processors over a five-year period. China made up about 13% of Nvidia's revenue in the last financial year, underlining its importance as a market. The chip company announced its most powerful Blackwell chip in March this year. Huang said that Blackwell GPUs are built to train the world's largest AI models that have a trillion parameters. Also Read | ETtech Explainer: All you wanted to know about Nvidia's Blackwell AI chip What lies ahead? In China, companies such as Huawei and Alibaba are developing AI chips to challenge Nvidia, while expanding domestic manufacturing in recent years. Reports suggest that Alibaba's AI processor could match the performance of Nvidia's H20 chip, which was designed specifically for the Chinese market. A Reuters report pointed to Huawei's growing role in China's domestic semiconductor industry. The company, which introduced its first AI chip earlier this year, is planning to roll out a next-generation version in early 2026. Nvidia generated $60 billion in free cash flow over the past 12 months, according to David Trainer, chief executive of investment research firm New Constructs. He said the company would need to produce $2.1 trillion in annual cash flow within the next 10 years to justify its current stock valuation. A recent Gartner report estimated that worldwide spending on AI will rise to more than $2 trillion next year, a 37% increase from the nearly $1.5 trillion that the research firm expects to be spent this year. Questions about whether current investment levels are sustainable remain unresolved. While Nvidia's growth has reinforced confidence in AI, some investors worry that Big Tech may be overinvesting and taking on too much risk, especially as a few firms increase borrowing to fund AI expansion.

Google boss warns no company immune if AI bubble bursts

The head of Google's parent company Alphabet warned that every company would be impacted if the AI bubble were to burst, in an interview to the BBC. Sundar Pichai acknowledged there was "irrationality" behind the boom in artificial intelligence investment, which has fueled a tech rally this year. But fears that the AI bubble could burst have led to a selloff, sending global stock markets tumbling in recent months. Asked if Google would be impacted by the AI bubble bursting, Pichai told the BBC: "I think no company is going to be immune, including us." The interview, published late Monday, covered long-standing concerns surrounding AI, including energy needs, reducing climate targets, accuracy and the impact of AI on jobs. Pichai warned of the "immense" energy requirements of AI, which accounted for 1.5 percent of global electricity consumption last year, according to the International Energy Agency. AI's global computing footprint could reach 200 gigawatts by 2030 -- the annual equivalent of Brazil's electric consumption -- half of that in the United States. Geopolitical tensions have helped drive a tech frenzy to build massive data centers housing tens of thousands of chips requiring a phenomenal amount of electrical power and large-scale cool. Pichai said action was needed to develop new energy sources and strengthen infrastructure. The tech boss also acknowledged that the energy needs of Alphabet's AI operations would delay the company's climate goals, but insisted the company was still aiming for carbon neutrality by 2030. AI will also have an impact on work as we know it, he said. Pichai said it would cause "societal disruptions," even potentially replace CEOs, and "people will have to adapt." He insisted those who adapt to AI "will do better." "It doesn't matter if you want to be a teacher or a doctor. All those professions will be around, but the people who will do well in each of those professions are people who learn how to use these tools." Alphabet reported its first $100 billion quarterly revenue in October, which it said was buoyed by its ability to capitalize on the AI boom. The tech giant has ramped up spending to meet demand for AI infrastructure and pushed a global rollout of AI features in Google Search and the company's Gemini AI models.

Nvidia's upbeat forecast soothes fears of AI stock market bubble

New York: Nvidia delivered a surprisingly strong revenue forecast and pushed back on the idea that the AI industry is in a bubble, easing concerns that had spread across the tech sector. The world's most valuable company expects sales of about $65 billion in the January quarter - roughly $3 billion more than analysts predicted. Nvidia also said a half-trillion-dollar revenue bonanza due in coming quarters may be even bigger than anticipated. The outlook signals that demand remains robust for Nvidia's artificial intelligence accelerators, the pricey and powerful chips used to develop AI models. Nvidia had faced growing fears in recent weeks that the runaway spending on such equipment wasn't sustainable. "There's been a lot of talk about an AI bubble," chief executive officer Jensen Huang said on a conference call with analysts. "From our vantage point, we see something very different." The upbeat commentary sent shares up about 5.4% in early trading on Thursday before markets opened in New York. They had gained 39% this year through the close, leaving the company's market value at $4.5 trillion. Nvidia results have become a barometer for the health of the AI industry, and the news lifted a variety of related stocks. CoreWeave, a provider of AI computing, gained more than 9% in extended trading. Its peer Nebius Group NV climbed more than 8%. Benchmarks in South Korea, Taiwan and Japan gained, fueled by Nvidia suppliers, including Taiwan Semiconductor Manufacturing Co and Tokyo Electron. "Markets are reacting very positively to the news that there is no slack in AI momentum," Brian Mulberry, senior client portfolio manager at Zacks Investment Management, said in a note. His firm owns Nvidia shares. "Demand for Nvidia hardware solutions remains strong," he said. Nvidia's CEO had said last month that the company has more than $500 billion of revenue coming over the next few quarters. Owners of large data centers will continue to spend on new gear because investments in AI have begun to pay off, he said. Chief financial officer Colette Kress went further on Wednesday, indicating that Nvidia would likely eclipse the $500 billion target. "There's definitely an opportunity for us to have more on top of the $500 billion that we announced," she said on the conference call. "The number will grow." The growing role of AI will help maintain demand for Nvidia's products, Huang said. The technology is helping speed up existing computing work, such as search. And it's about to come to the physical world in the form of robots and other devices. Nvidia's third-quarter results also topped analysts' estimates. Revenue rose 62% to $57 billion in the period, which ended October 26. Profit was $1.30 a share. Analysts had predicted sales of $55.2 billion and earnings of $1.26 a share. Nvidia's main data center unit had revenue of $51.2 billion in the quarter, compared with an average estimate of $49.3 billion. Chips used in gaming PCs -- once the company's chief source of revenue -- delivered sales of $4.3 billion. That compares with an average estimate of $4.4 billion. The forecast for the latest quarter reflects a staggering run for the company. Sales will be up more than 10-fold from where they were in the same period just three years ago. And Nvidia is on course to deliver more annual net income than two longtime rivals -- Intel Corp and Advanced Micro Devices -- will report in sales. But Nvidia's expansion has faced challenges. US restrictions on the shipment of advanced chips to China have largely locked Nvidia out of a massive market for its products. Huang has lobbied Washington to overturn those rules -- arguing that they're counterproductive to the national security concerns they're meant to serve. But even after some rollback of the toughest elements, Nvidia isn't currently projecting any sales from AI accelerators in China. "Our forecast for China is zero," Huang said in a Bloomberg Television interview. "We would love the opportunity to be able to reengage the Chinese market with excellent products." Some investors also have expressed concerns about the structure of the megadeals that Nvidia has struck with customers. The transactions involve investments in startups such as OpenAI and Anthropic PBC, raising the issue of whether the pacts are creating artificial demand for computers. Earlier this week, Nvidia and customer Microsoft Corp said they've committed to invest as much as $15 billion in Anthropic. The startup has also pledged to purchase $30 billion of computing capacity from Microsoft's Azure cloud service and will work with Nvidia's engineers on fine-tuning chips and AI models. On the conference call, Huang was questioned about the deals with OpenAI and Anthropic. Huang said Nvidia's investment in OpenAI, which still hasn't been finalised, will provide a good return, he said. Backing Anthropic, meanwhile, will help establish ties with a company that hasn't been a big user of Nvidia's technology, he said.

Tipping point or bubble? Nvidia CEO sees AI transformation while skeptics count the risks

SAN FRANCISCO (Reuters) -Nvidia CEO Jensen Huang says he does not see an AI bubble, but rather a tipping point. In his view, the kind of computing his company specializes in will come to suffuse everything from writing code to running legions of robots in the everyday world. But a growing band of market skeptics are concerned the only way off a tipping point is down. The chip giant on Wednesday produced results and forecasts that beat expectations, allaying immediate fears. But there are longer-term worries that Nvidia's growth could be crimped by factors beyond the control of even the most valuable listed company in human history, now worth more than $4.5 trillion. In a regulatory filing, Nvidia disclosed the majority of its booming business rests on four unnamed customers. In the third quarter, 61% of its $57 billion in revenue came from those customers, up from a 56% concentration among four customers in the previous quarter. Past announcements suggest they could include Microsoft, Meta and Oracle. Nvidia also doubled the money it spends renting back its own chips from cloud customers to $26 billion, up from $12.6 billion in the second quarter, with those contracts stretching to at least 2031. The company in the past quarter said it would invest up to $100 billion in OpenAI and $10 billion in Anthropic, two major customers. Its high reliance on just a few customers it is entangled with and the circular nature of some of its deals have raised concerns, particularly as none of the entities have reported massive profits from AI yet. "A lot of this growth is coming from loss-making startups or loss-making projects, so most likely the cycle ends badly unless all these companies agree to stop spending together and let profits shine through, which is a near impossibility," said Chaim Siegel, an analyst at research firm Elazar Advisors. HUANG BRUSHES OFF BUBBLE TALK During an earnings call, Huang said Nvidia sees something "very different" from the market talk of an AI bubble. He outlined three transitions as part of a vision where Nvidia could reign supreme for years to come. First, there is the shift of non-AI software such as engineering simulations and data science away from traditional central processors to Nvidia's high-powered chipsets. Then there is the invention of entirely new categories of software such as coding assistants. And later, he sees AI jumping from virtual applications such as chatbots to the physical world of cars, robots and more. "These three fundamental dynamics each will contribute to infrastructure growth in the coming years. Nvidia is chosen because our singular architecture enables all three transitions," Huang said. But building all of the required data centers to meet that vision will require an enormous amount of land and power, concerning even Nvidia bulls such as Ivana Delevska, chief investment officer of Spear Invest, which holds the company's shares in an actively managed exchange-traded fund. Huang addressed those concerns on the conference call, saying Nvidia was working diligently to make sure factors beyond the chip supply chain would not stand in its way. "We've now established partnerships with so many players in land and power and (data center buildings), and of course, financing these things," he said. "None of these things are easy, but they're all tractable, and they're all solvable things." But as companies like Google parent Alphabet and Amazon design their own AI chips and begin to sell them to a similar customer base, some analysts said a looming era of Nvidia maintaining its dominance is far from certain. "They have said they are sold out for the year and probably next, which leads me to wonder what possible upside surprises they could offer," said Jay Goldberg, senior analyst at Seaport Research Partners, which has a "sell" rating on Nvidia. "The list of things that could go wrong for Nvidia is longer than the list of things that could go right." (Reporting by Arsheeya Bajwa in Bengaluru and Stephen Nellis in San Francisco; Editing by Jamie Freed)

Nvidia's AI Tipping Point: Boom or Bubble? - No AI Bubble, Says Jensen Huang

Some analysts argue the AI boom is fuelled by loss-making start-ups and projects. They warn the cycle could end poorly if spending does not eventually turn into profits. Huang describes three long-term shifts that he believes will power Nvidia's growth. First is the movement of traditional, non-AI software -- like engineering simulations and data science -- away from CPUs and towards Nvidia's accelerated computing platforms. The second shift involves the rise of entirely new AI-native tools, including coding assistants that transform how developers work. Finally, he envisions AI expanding beyond digital applications, moving into the physical world through cars, robots, and other autonomous machines.

Relying on AI too much? Google's boss Sundar Pichai has a warning about the tech and the bubble it is creating

The Google chief's comments come at a time when AI adoption is reaching new highs in workplaces, schools and digital platforms. His caution highlights a growing industry consensus: AI is powerful, but still imperfect -- and users must stay alert even as companies race ahead in the global AI boom. At a moment when AI-generated answers are slipping into everyday conversations, from office chats to school homework and even family WhatsApp groups, Google CEO Sundar Pichai has stepped in with a gentle reminder: do not hand over your judgement to machines just yet. Speaking to the BBC, Pichai warned that today's highly popular AI tools, despite their growing influence, are still "prone to errors" and must not be "blindly trusted". His caution comes at a time when global excitement around AI is soaring, investment is at a historic peak, and tech companies are racing to build the next big breakthrough. But Pichai says the hype comes with risks. Even Google, he admits, will not be immune if the AI investment bubble suddenly bursts, a moment he believes no firm can completely escape. Pichai, who leads Alphabet, said it is important for users to balance AI-generated answers with other trusted information sources. He stressed that a bigger and stronger information ecosystem is necessary for accurate public understanding. "This is why people also use Google search, and we have other products that are more grounded in providing accurate information," Pichai told the BBC. Also Read: Delhi's 'toxic' air hits offices: Employee requests WFH for severe headache, and what the manager said is now viral He added that AI could be useful "if you want to creatively write something", but reminded users that they "have to learn to use these tools for what they're good at, and not blindly trust everything they say". In May, Google rolled out an "AI Mode" inside its search product using its Gemini chatbot, designed to offer an experience similar to "talking to an expert". But Pichai admitted the technology is far from perfect. "We take pride in the amount of work we put in to give us as accurate information as possible, but the current state-of-the-art AI technology is prone to some errors," he said. Pichai also addressed concerns about an AI investment bubble, saying the current phase is a mix of rational excitement and "irrationality". He said the momentum in the industry mirrors earlier tech booms. "We can look back at the internet right now. There was clearly a lot of excess investment, but none of us would question whether the internet was profound. Also Read: Rs 7.4 lakh to Rs 60 lakh: Techie's journey from tier 3 college to FAANG offer inspires the internet "I expect AI to be the same. So I think it's both rational and there are elements of irrationality through a moment like this," he said. Asked if Google would be safe in case of an AI market collapse, Pichai replied: "I think no company is going to be immune, including us." Despite global uncertainties, Google is expanding its investments. The company has committed 5 billion pounds to new infrastructure and research in the UK over the next two years. "We are committed to investing in the UK in a pretty significant way," said Pichai. (Inputs from PTI) (You can now subscribe to our Economic Times WhatsApp channel)