Nvidia CEO Jensen Huang rejects fears of an AI bubble, saying demand for AI remains strong. But several economists and investors warn that progress is slowing and that heavy spending, high debt, and circular deals may inflate the market. Tech giants plan huge data-center investments, while major investors like Peter Thiel and Michael Burry signal caution.
Jensen Huang on AI growth
Nvidia Chief Executive Jensen Huang addressed rising concerns about an AI bubble during a recent call with investors. He said many people are talking about a bubble, but Nvidia sees the current moment as a major change in how companies use technology. He stressed that the demand for AI tools is real and will continue to grow. Several tech leaders support his view. Venture capitalist David Sacks called the current rise in AI spending an “investment super-cycle.” Investor Ben Horowitz said it is wrong to doubt future demand. JPMorgan executive Mary Callahan Erdoes also described the shift as the start of a major change in business operations.
Others experts remain cautious
Some experts remain cautious. MIT researcher and venture capitalist Paul Kedrosky said the excitement around AI is often speculative. He said the technology is useful, but its progress has slowed. He warned that expecting the same level of improvement for the next five years is unrealistic.
Tech giants to spend heavily on data centers
Amazon, Google, Meta, and Microsoft are expected to spend about $400 billion on AI this year. Much of this money will go toward building data centers. Analysts at Goldman Sachs say these companies have taken on $121 billion in debt in the past year to support this expansion. This is more than three times the usual amount of debt in the industry. Some tech companies are also using special purpose vehicles to build data centers. These structures let firms pay for projects without showing the debt on their main financial statements. Analysts warn this could hide risks if demand falls in the future.
Circular deals raise more questions
Experts are also worried about circular deals that may inflate demand for AI chips. One example is Nvidia’s $100 billion investment in OpenAI. OpenAI then uses part of this money to buy Nvidia chips. Some economists say such deals make demand look stronger than it really is. MIT economist Daron Acemoglu warned that these kinds of arrangements could fall apart and expose bigger weaknesses in the sector.
Investors show signs of caution
Some well-known investors are already pulling back. Peter Thiel sold his Nvidia shares worth about $100 million. SoftBank also sold nearly $6 billion in shares. Hedge fund manager Michael Burry, known for predicting the 2008 financial crisis, has now placed bets against Nvidia.
