Market investors are starting to bet on Nvidia's fall from AI grace
Endless growth is a mirage, and Jensen Huang won't surf the high heavens for much longer
By Alfonso Maruccia June 10, 2024, 12:57
A hot potato: Nvidia's growth in the past few years has been nothing short of spectacular. The GPU manufacturer is selling a massive number of chips for accelerating AI algorithms, but some investors are now concerned about what comes next. And it's a financial bloodbath.
Nvidia could soon become the most valuable company in the world, but there's growing concern that these stellar market results cannot be sustained for much longer. A recent Reuters report highlighted that short bets against Nvidia have now reached $34 billion, almost twice the amount of bets against Apple ($19 billion) and Tesla ($18 billion).
The Santa Clara-based GPU maker recently achieved a market cap of $3.011 trillion, briefly entering the exclusive "$3 trillion" club along with Apple and Microsoft. Nvidia is expected to eventually overtake Microsoft and become the most valuable company in the world, thanks to the insatiable appetite for AI chips.
The explosive growth of generative AI, chatbots, and other machine learning algorithms has fueled Nvidia's sudden and dramatic increase in market cap. Everyone is investing in some AI-related venture or financial speculation these days, and Nvidia managed to increase its stock value by 143 percent this year alone.
As MarketWatch notes, however, investors in 2023 were already questioning how long Nvidia could maintain the higher-than-average growth levels experienced in recent years. Nvidia's results for the first quarter of fiscal year 2025 were up by 262 percent year-over-year, but those annual increases are expected to slow significantly in the near future.
Some industry watchers have started to sound the alarm about unregulated AI hype, predicting that the AI bubble will soon burst, bringing Nvidia, Microsoft, and many other Big Tech companies back to more realistic expectations about the future of technology. Nothing can grow exponentially forever, professor John Naughton recently told The Guardian, noting that the only planet we live on cannot be " paved with data centers."
AI technology is an environmental disaster in the making, Naughton remarked, and shareholders will soon discover that chatbots are following the same path as previous tech and market disasters like the first internet bubble. Researchers at Capital Economics have even set a date for the inevitable AI bubble burst, predicting 2026 as the year of reckoning after another brief growth period in 2025.
Link: techspot.com |
