The case against Nvidia’s $5.05 trillion valuation is solidifying around two key points: a “circular” $100 billion deal with OpenAI and the widespread failure of corporate AI pilot programs. These arguments are fueling the “bust” side of a high-stakes debate.
While bulls celebrate Nvidia’s $1 trillion growth in three months, skeptics are sounding the alarm. The Bank of England and the IMF have issued formal warnings about an AI bubble, suggesting this growth is not sustainable.
The “circular” deal is exhibit A for the bears. They argue the $100 billion pact isn’t a simple sale, but a feedback loop inflating the market.
Exhibit B is the disconnect between spending and profit. Analysts are reporting that “nearly all AI pilot programs in businesses fail.” This is a critical problem: if businesses can’t use AI profitably, who will buy Nvidia’s chips in the long run?
The “boom” case still rests on a $500 billion order book and partnerships with Uber, Nokia, and the US government. But the “bust” argument is compelling: if the deals are “circular” and the products “fail,” the $5.05 trillion valuation is a house of cards.