Is AI a Bubble? The Nvidia–OpenAI $105B Deal

Is AI a bubble? No. And potentially yes. AI can be a genuine technological revolution and a financial bubble at exactly the same time. Nvidia's new $105 billion OpenAI guarantee is the cleanest example yet.

Nvidia did not simply give OpenAI $105 billion. It has guaranteed part of a 20-year infrastructure deal. OpenAI will rent one of the largest AI data centres in the world from SB Energy, and that data centre will be filled with Nvidia chips.

Imagine your landlord refuses to rent you a house unless somebody more financially stable co-signs the lease. Fairly normal. The twist is that your co-signer is IKEA, and you have promised to fill the entire house exclusively with IKEA furniture. Billy bookcases on every wall. Armchairs to the ceiling. Every nook and cranny stuffed with IKEA blue bags.

That is roughly what has happened here. Nvidia is helping OpenAI secure the house so OpenAI can continue buying furniture from Nvidia. The supplier is helping finance the customer buying its own product. You can see why people are worried.

Money moving in a circle does not automatically make something a scam. The useful question is: where does outside money enter the loop?

The healthy version is that millions of people and businesses pay OpenAI for ChatGPT, Codex and the API. That customer revenue services the lease because the infrastructure produces something people genuinely want. The fragile version is OpenAI repeatedly returning to investors and asking for a few more billion. Investor money can bridge the gap while a market grows, but it cannot replace customers forever. The piper must be paid eventually.

I read Nvidia's SEC filing, OpenAI's announcement, Jensen Huang's response and the arguments on both sides. We look at why Jensen says this is not circular financing, Nvidia's move from chips into full AI infrastructure, the risks from China, open-weight models and Anthropic, and what happens if OpenAI cannot support the lease.

The dot-com comparison is useful here. The internet won, but plenty of technology companies and investors still lost everything. AI tools can be useful, OpenAI can have real customers, Nvidia can sell real chips, and parts of the financial structure can still be overpriced or too interconnected.

We do not have to choose between "AI changes everything" and "AI is a bubble." Both can be true. If the AI bubble bursts on Thursday, I will still be using AI tools on Friday. The technology can win but the money can lose.

Has AI changed your life for the better or worse? Tell me in the comments.

00:00 Is AI a bubble?

03:37 What actually happened

06:21 Follow the money

15:31 The bull and bear case

23:09 The dot-com test

Sources and further viewing:

https://www.noahpinion.blog/p/should-we-worry-about-ais-circular

https://x.com/JensenHuang/status/2089331487342829862

https://openai.com/index/openai-joins-ports-pike-project/

https://www.youtube.com/watch?v=9yy_Wz0BbyU

I follow the fast-moving AI stories, read the source material and turn the jargon into something useful for people running businesses and using AI day to day.

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