👀 Fears over AI bubble bursting grow in Silicon Valley

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Key Takeaway:

A surge of intertwined megadeals, cross-investments, and “vendor financing” is fueling AI’s meteoric rise, stoking fears that valuations outrun real demand and could trigger a painful, economy-wide unwind.

More Insights:

Sam Altman admits “bubbly” pockets but says OpenAI’s growth is real—even as it remains unprofitable.
Big warnings (BoE, IMF, Jamie Dimon); AI names drove ~80% of U.S. market gains; Gartner pegs AI spend near $1.5T by end-2025.
OpenAI’s web: $100B with Nvidia, plans to buy billions from AMD, deep ties with Microsoft and Oracle; Nvidia also backs CoreWeave, an OpenAI supplier.
Critics call this “circular/vendor financing” (Nortel déjà vu); Nvidia’s Jensen Huang says no exclusivity or spending strings attached.
Signs of froth: splashy plans without secured capital, retail rush into chip stocks, massive 10-GW data-center builds—and environmental concerns—though some argue overbuild could still seed future innovation.

Why it matters: If AI demand is being propped up by circular money rather than durable economics, the eventual comedown could hit chips, cloud, and startups simultaneously—leaving stranded megaprojects and exposing how concentrated the funding power has become—so transparency, stress-testing, and true unit-economics discipline are critical right now.

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