Nvidia's Record Profits Signal Dangerous AI Bubble, Columnist Says
Nvidia reported a doubling of net profit to roughly $60 billion and revenue of $96.22 billion, with expectations of another 70 percent increase next fiscal year. Despite these strong results, columnist Howard French argues that the company's outsized market value and the broader AI boom resemble Japan's asset bubble in the 1980s. He warns that the current enthusiasm may not end well for the global economy.
Nvidia's quarterly results show net profit doubling year-over-year to roughly $60 billion, up from just $6.2 billion three years ago, with revenue reaching $96.22 billion. The company projects another 70 percent revenue increase next fiscal year, even as its market valuation already exceeds $5 trillion, making it the world's most valuable company.
The article highlights a structural concern: Amazon, Google, Meta, and Microsoft are projected to spend $1.5 trillion on data centers this year and next, yet few of these major chip buyers are profitable despite their enormous investments. Nvidia has begun co-financing arrangements with some customers, including OpenAI, effectively underwriting demand for its own products.
This story could signal broader economic vulnerability if the AI investment cycle falters. Millions of ordinary Americans hold Nvidia shares indirectly through retirement accounts and mutual funds, meaning a sharp correction could erode household wealth well beyond tech investors. The concentration of market value in a handful of AI-related companies may also amplify systemic risk, potentially affecting pension funds, financial institutions, and overall market stability if enthusiasm cools.