Nvidia's "AI Bubble" Denial: What's Real vs. What They Want You to Believe

Nvidia's "AI Bubble" Denial: More Like a Slow-Motion Train Wreck?

So, Nvidia's out there saying there's no AI bubble. CEO Jensen Huang is all, "From our vantage point, we see something very different." Yeah, well, CEOs always see something different, especially when their stock price is on the line. Give me a break.

The numbers look good, I'll grant them that. Revenue beat expectations, data center unit killing it, future projections are rosy. Shares jumped. Everyone's happy. Except... are they really?

The "Everything is Awesome" Narrative

Okay, let's break down this "everything is awesome" narrative. They're bragging about $57 billion in revenue, beating estimates, blah blah blah. CFO Colette Kress is chirping about half a trillion in AI chip orders. Half a trillion? Seriously? Where's that money coming from? Are they printing it in the back room? And more importantly, when do they expect to see that cash? Because "on track" sounds suspiciously like "we hope."

Then there's the China situation. "Disappointed" is putting it mildly. They can't fulfill "sizeable purchase orders" because of "geopolitical issues." Translation: the US government is screwing them over, and they can't sell their precious chips to the biggest market on the planet. But hey, at least they're "committed to continued engagement" with both governments. Good luck with that.

The Circular Firing Squad of AI Investments

And let's not forget the incestuous web of AI deals. Nvidia's investing in OpenAI, who's probably buying more Nvidia chips, who's then investing in xAI… it's a circular firing squad of hype and inflated valuations. Eileen Burbidge is right on the money when she calls it out as "circular deals going on, whereby Nvidia is committing to invest in a company which in turn is committing to invest in Nvidia or is committing to buy Nvidia chips." It's like a bunch of drunks propping each other up at the bar.

Oh, and Huang is buddying up with Elon Musk to build some massive data center in Saudi Arabia. Outfitted with hundreds of thousands of Nvidia chips. Well, offcourse, nothing says "stable investment" like betting the farm on Saudi Arabia and Elon Musk. What could possibly go wrong?

The Dot-Com Echo

Look, I'm not saying Nvidia is going to go bust tomorrow. They're making real money, for now. But this whole AI frenzy feels eerily familiar. It's the dot-com bubble all over again, except this time it's powered by GPUs instead of dial-up modems. Sundar Pichai even admitted there was some "irrationality" in the current AI boom. And if the head of Google thinks things are a little crazy, that's saying something. Simon French is right - it's not Nvidia itself that's the problem, it's the wider ecosystem that isn't profitable.

The question isn't whether Nvidia will beat expectations, it's by how much. And even if they keep beating expectations, that doesn't mean the underlying foundation isn't shaky as hell. I just don't trust it. According to a recent Nvidia earnings recap, the stock price jumped after the revenue beat expectations, even as the CEO dismissed AI bubble concerns.

This Smells Like 2000 All Over Again...