Technology

My point is Nvidia isn't propping up the bubble. If you look at the OpenAI deal, it's a bit less than their yearly revenue, and the deal is for about the number of GPUs they make in a year, so it's basically trading GPUs for equity. If anything, Nvidia is profiting from the bubble, not propping it up.

we will all be effected

Oh certainly, but I don't think it's any different from other large corrections.

Here's how I see the major companies in that chart in a crash situation:

• Nvidia - currently trading at 50+ times earnings on AI hype, but 25 is more reasonable, so potential crash of 50%, but probably much less since they're still king in non-AI compute
• Microsoft - AI is mostly value add, and the stock isn't too inspired overhyped, so maybe 10% correction?
• OpenAI - would go under and get liquidated
• Oracle - datacenters and AI aren't a huge part of its business, so probably minimal impact
• the rest - haven't looked into all of them, but most will be hit hard

It'll he hit hard, but not nearly as bad as 2000 or 2008. If I look at the S&P 500, only 3 of the top 10 (Nvidia, Google, Meta) would be severely impacted, the rest only seem to dabble. Those 10 make up almost 40% of the S&P 500 and like 30-35% of the total US market. There are more large companies in there as well, but I don't think most will be screwed like OpenAI. Palantir, for example, likely retains its government contracts for their data alone.

So in an AI bubble scenario, I'm guessing we see a correction of like 20-30%, maybe less depending on the nature of it. I think a more likely scenario is a bear market where investors slowly get tired of poor earnings as the promises of AI fail to manifest. If OpenAI dies, large companies just move to another provider.

And final note, it’s not a bubble because someone made a graphic, they made a graphic describing how it could be a bubble.

I think they're missing the forest for the trees here. It's not a bubble because these companies are investing in AI, it's a bubble because tons of companies are buying into the hype. These companies are merely investing into solutions those companies claim to want. I work for a relatively small non-US company (a few thousand employees, revenue around $1B), and the board recently came to our tech group asking what we're doing with AI.

This isn't a handful of companies propping it up, a large chunk of the market is afraid of being left behind and demanding AI tools. All the graphic shows is how large companies are investing to meet the demand. Microsoft used OpenAI products in its offerings, OpenAI is a major Nvidia customer, etc.