META - Bubble.AI: How Long And Who Will Survive?

2024-05-25 03:40:00 ET

Summary

• The financial media will digress to one of its favorite games, “Is this a bubble or is AI for real?” The answer is yes.
• AI’s economic promise feels real, obvious even. And that is what makes a bubble inevitable.
• Of course, we are in a bubble now - how could we not be after the mind-blowing debut of ChatGPT? AI is amazing, but the bubble-multiplier effect is very much in play.
• The darling of AI, Nvidia, has been painted into a corner of good problems. But, nonetheless, a corner.

Note: This newsletter is not investment advice.

Five years ago, Nvidia ( NVDA ) was a second-tier semiconductor company known for giving Call of Duty better resolution. Today it’s the third most valuable company on Earth, with a dominant 80% share in AI chips, the processers underpinning the largest, fastest creation of value in history ( $8 trillion ).

Since fellow AI supernova OpenAI released ChatGPT in October 2022, Nvidia’s value has increased by $2 trillion, or about the value of Amazon ( AMZN ). This week, Nvidia reported monster quarterly earnings - its core business, selling chips to data centers, was up 427% year over year....

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