The current situation in the AI market is often referred to as a bubble. Even investors are now expressing doubts about the potential of these hundreds of billions of dollars in investments. According to Bloomberg, Wall Street analysts are worried about the market.
Specifically, they are concerned about the enormous amount of debt being taken on by leading tech and AI companies to build the necessary infrastructure. While companies like Nvidia, which sells AI accelerators, immediately reap huge profits, the AI-specific companies are often unprofitable.
The ecosystem is expanding by including companies with weaker balance sheets, such as Oracle and CoreWeave, which are burdened with substantial debt. This interconnection among players creates systemic risk. Although leading companies continue to show strong performance in terms of dynamics, recent stock price fluctuations indicate declining confidence and an increasing risk of a more extensive crash. Notably, Nvidia’s market capitalization dropped from a record $5 trillion in late October to $4.4 trillion today.
