Nvidia’s OpenAI deal under investor scanner: James Anderson sees risks; AI bubble fears grow

Investor James Anderson has raised concerns about Nvidia’s $100 billion deal with OpenAI. He says it reminds him of risky financial practices from the dot-com era. AI valuations are rising fast, but some experts worry that the hype may be ahead of real business growth. Others, however, believe the AI sector will continue to grow strongly.

James Anderson, a well-known tech investor, has said that Nvidia’s new partnership with OpenAI looks risky. He compared the deal to "vendor financing," a practice that became popular during the 1990s dot-com boom but later led to big losses. In the deal, OpenAI would use cash to buy Nvidia’s chips. Nvidia would then invest that same money back into OpenAI as shares. Anderson said this kind of deal makes him uncomfortable because it can hide real financial risk. “It’s not exactly what companies did back in 1999, but it feels similar,” Anderson told the Financial Times.

Anderson’s warning comes at a time when the value of AI companies is growing quickly. OpenAI is said to be planning a new share sale that could value the company at $500 billion. Just a few months ago, it was valued at $300 billion. Another AI firm, Anthropic, is now valued at $170 billion.

Nvidia, which makes the computer chips that power many AI systems, has also become one of the world’s most valuable companies. Its market value briefly crossed $4.5 trillion this year. Anderson agrees that Nvidia is a strong company, but he said the recent rise in its value was “disconcerting.”

Not everyone agrees that the AI market is heading toward a bubble. Dan Ives from Wedbush said AI growth is just beginning. He called the current stage the "second inning" of a long tech cycle. Goldman Sachs also said demand for AI chips and data centers will grow by over 160% by 2030. Investor Mark Cuban said AI is “the great democratizer,” and rejected comparisons to past tech bubbles.

However, some experts agree with Anderson. Jeremy Grantham, a long-time investor, has called AI “a bubble waiting to pop.” Bank of America’s Michael Hartnett said that tech stocks like Nvidia are signs of a possible bubble. Some analysts believe many AI companies are still not making real profits. They say if the hype continues without strong business results, the market could face a sharp correction.

1. What is the Nvidia–OpenAI deal?OpenAI plans to buy $100 billion worth of Nvidia chips. Nvidia would invest that money back into OpenAI.
2. Why is the deal being criticized?Investor James Anderson says it reminds him of risky financial practices from the 1990s dot-com bubble.
3. Do all experts think AI is a bubble?No. Some believe AI still has strong long-term potential due to rising demand for data and chips.