Nvidia’s historic $5.05 trillion valuation is facing scrutiny as critics argue the AI boom is a “circular” bubble. The chipmaker, which became the first $5T company on Wednesday, is at the center of a debate over whether its value is real or just hype.
The main piece of evidence for skeptics is Nvidia’s $100 billion investment in OpenAI. This investment is tied to OpenAI’s plan to purchase millions of Nvidia’s own chips. This “circular” flow of capital, where Nvidia funds its own customer, has regulators at the Bank of England and the IMF raising alarms.
This concern is coupled with a growing body of evidence that the AI revolution is struggling to be profitable. Analysts are flagging that “nearly all AI pilot programs in businesses fail” and that companies are “failing to secure revenue returns” on their massive AI investments.
This stands in stark contrast to the market’s bullishness. Nvidia’s stock is soaring, its value jumped $1 trillion in three months, and it has a $500 billion order book. It also has the backing of President Donald Trump.
The question now is whether this is the next iPhone-level tech shift or a massive, self-funding bubble. As Nvidia’s value soars past the GDP of major nations, the answer will have global economic consequences.