Nvidia’s coronation as the world’s first $5 trillion company on Wednesday is being met with both celebration and severe trepidation. While the $5.05 trillion valuation is a landmark achievement, driven by “ravenous” AI chip demand, top economic officials are warning that it may be a bubble waiting to burst.
The bull case is strong. The company’s value rocketed from $4T to $5T in only three months. CEO Jensen Huang announced $500 billion in orders, a robotaxi deal with Uber, and a $100 billion partnership with OpenAI. President Donald Trump, a shareholder, called it a “success story” and is even pushing for chip sales to China.
The bear case, however, is growing louder. The Bank of England and the head of the IMF have both raised the alarm. They fear that the AI boom, which has lifted the entire US stock market, has pumped tech stock prices to unsustainable levels, disconnected from real-world profits.
Critics are focusing on the “circular” nature of the industry’s finances. Nvidia’s $100 billion investment in OpenAI, for instance, is predicated on OpenAI buying millions of Nvidia’s own chips. This creates a feedback loop of value that may not be sustainable.
Furthermore, there is growing evidence that the AI revolution is not yet profitable for many businesses. Analysts are concerned that companies are “failing to secure revenue returns on their AI investments,” with reports indicating that “nearly all AI pilot programs in businesses fail.” This disconnect between hype and reality is at the center of the bubble debate.
