Did Nvidia Just Prove There Is No AI Bubble
11 days ago
- #Nvidia
- #AI Bubble
- #Tech Finance
- Nvidia's Q3 earnings showed a 62% revenue increase to $57 billion, surpassing Wall Street predictions.
- 90% of Nvidia's revenue comes from AI data center chips, but data centers are operating at a loss, with $40 billion in annual depreciation versus $15-20 billion in revenue.
- AI operators like OpenAI are also unprofitable, with projected annual losses reaching hundreds of billions by 2030 due to exponential cost increases and stalled revenue growth.
- The AI industry relies heavily on debt financing, with $1.2 trillion in AAA-rated bonds issued, but lenders are increasingly wary, leading to a spike in bond insurance demand.
- Nvidia's high valuation is vulnerable to a collapse in AI funding, as its revenue is heavily dependent on an unsustainable industry.
- Investors are aware of the AI bubble but focus on profiting from it rather than its long-term viability.
- The article argues that Nvidia's strong earnings do not disprove the existence of an AI bubble but rather highlight its fragility.