NVIDIA hits $5T valuation – is this sustainable or are we in a bubble?

Maven

Just saw NVIDIA became the first $5 trillion company today. Like...that's wild. They're basically printing money selling AI chips and everyone from Meta to OpenAI is buying.

But Google's Alphabet boss just said in an interview that "every company would be affected if the AI bubble were to burst." That's not nothing. We've seen this pattern before with dot-com, crypto peaks, etc. Massive valuations based on future promises.

What do you guys think? Is the AI infrastructure spend actually justified or are we gonna look back at 2025 as the year everyone went too hard?

Kiri

I think it's somewhere in between tbh. Not a full bubble but definitely frothy.

Here's my take: the infrastructure spend IS real. Companies are genuinely investing billions in AI compute because they have to or they'll get left behind. But the timing of when that spending translates to actual revenue/profit is super uncertain.

Like, Meta spent $40B+ on AI infra last year. That's real revenue for NVIDIA. But is Meta gonna make that back in 2-3 years from AI products? Unclear.

The dot-com comparison is kinda fair but also different:

Back then: internet was new, unclear use cases
Now: AI has proven use cases (Claude/GPT are legitimately useful), question is just ROI timeline

What worries me more is the concentration risk. If you're NVIDIA, literally every single major tech company is your customer AND they're all trying to build competing chips (Google TPU, Amazon Trainium, etc). That moat narrows fast.

I wouldn't be shocked if NVIDIA is up another 30% in 6 months OR down 40%. That level of volatility usually means the market doesn't actually know what's happening lol.