The Canary In The Coal Mine: Is Nvidia The First Sign Of The AI Bubble Bursting?
In short, yes.
Over the past few years, there has been an ever-growing chorus of people pointing out the inane price of AI stocks and claiming a market bubble is ready to burst and possibly even take out some big tech giants. AI diehards have mostly been able to brush off these worries, claiming the technology is poised to revolutionise practically every industry on Earth, justifying said stock prices. Well, we may have had our first tangible signs that there is not only an AI bubble but also that it is starting to burst. Nvidia recently announced it smashed its earnings predictions and hit a record revenue of $30 billion over three months. In fact, Nvidia doubled its sales compared to the same period last year. This means Nvidia now controls over 80% of the AI chip market, solidifying the company as a monolith of the AI industry. Yet, despite all of this, Nvidia stock fell 6% after this announcement, and AI companies associated with Nvidia, such as Meta and Amazon, also took a hit. The reasons for this counterintuitive slip paint a textbook example of a market bubble and how they burst.
But before we dive into that, let’s actually define a market bubble.
A market bubble happens when investors pour money into a stock or stock associated with an…
