Nvidia’s excellent results have been a relief for a technology sector plagued by doubts surrounding its billion-dollar investments in Artificial Intelligence (AI) infrastructure. Famous investors, financial analysts, bankers, businessmen and managers, journalists, economists, Nobel Prize winners… have been airing their concern for months about what they -understand-. It looks a lot like the formation of a financial bubble.
In 2022-2025, suspicions have grown about the emergence of a bubble on Digitalization technologies, specifically, AI. In past bubbles it was subprime mortgages and, previously, the Internet with “dot.coms.” To Americans, these sad events are reminiscent of the California “gold rush” (1850-1880): ordinary people see the opportunity to fulfill their dreams and sign up for a bombing. And, as in every bombing, there are dead and sick people, almost always, the most vulnerable, because the billionaires always get away with it.
In a context of investors nervous about the lack of return on their investment (ROI) in Artificial Intelligence, results from Nvidia that had not far exceeded market expectations would have led to a stock market crash with -possibly- dire financial and economic consequences. Furthermore, Jensen Huang predicted strong increases in demand in all its product lines: data centers, Blackwell platforms, GPUs, etc. Sales for the quarter reached a record $57 billion, due to demand for its “AI data center chips” more advanced (+62%). Forecasts for the last quarter of the year, Jensen Huang said, will reach 65 billion, above the 62 billion anticipated by analysts.
For the CEO of Nvidia, “we have entered the virtuous circle of Artificial Intelligence“, he said, perhaps to counteract the expression of “circular spending“, which critics use with agreements, in which clients and suppliers exchange investments, such as the last one announced between Nvidia, Anthropic and Microsoft. And others, such as that of Nvidia, Oracle, OpenAI, Microsoft and AMD.
He President Trump has opened two doors for Nvidia that would allow it to meet its ambitious objectives and, in addition, benefit its ecosystem partners: in May, Jensen Huang accompanied Trump to the Middle East and, like other executives in the technology sector, signed billion-dollar contracts to sell chips, data centers and GPUs to Qatar, Saudi Arabia and the Emirates. They did the same Lisa Su (AMD), Elon Musk (Tesla, X, xAI) y Sam Altman (Open AI), among others. And, perhaps more importantly, Trump has lifted all restrictions so that Nvidia can freely sell its products to China.
The US president announced this change in position, after the presentation of Nvidia’s results. Until two days ago, Nvidia could not sell its chips to China for a matter of National Security. But Jensen Huang is firmly in the MAGA camp. With the Chinese and Middle Eastern markets open for Nvidia, its optimistic sales and profit forecasts are much more likely to come true. This would obviously positively affect the rest of the BigTech firms: Microsoft, Oracle, AMD, Cisco Systems, Apple, Google, Amazon, Intel, Broadcom, Qualcomm, Salesforce, etc.
Is all that glitters gold? A deeper analysis…
“We live like in 1927-1928; 1998-1999 or 2005-2006“, said Ray Galio recently to CNBC: “There are many bubble elements“The dates mentioned by Dalio preceded economic recessions. Ray Dalio is not just any voice, but one of the five most successful investors in the world, with the hedge-fund Bridgewaters. A renowned author, the common denominator of his books, based on professional experience, is to explain “public debt“. Just published “How countries go bankrupt: The great debt cycle”. Previously, “Principles to overcome high debt crises”among other titles.
Dalio knows from his own experience: in 2025 he manages 95 billion dollars and has generated 58 billion in net profit. When Ray Dalio speaks, the investment, business and economic world takes note. And Ray Dalio says: “there are bubble elements in artificial intelligence”.
A day before Nvidia’s results were announced, Sundar PichaiCEO of Google, told the BBC that there are “irrationality in the markets“, with unbridled stock market valuations of technology companies, based on their investments in Artificial Intelligence. And he warned: “If there was an AI bubble and it burst, all technology companies would be affected, including Google“That is healing in health.
The perspectives of Ray Dalio and Sundar Pichai complement each other. Dalio puts emphasis on the depth charge: public debt. Pichai highlights the trigger: the corporate debt of companies in Artificial Intelligence.
The US public debt is a ticking bomb. It is the highest in the world, in absolute terms, and also, measured as a percentage of GDP: 125% in 2025; It will reach 140% in 2030. The United States leads the world ranking of public debt with 38.3 trillion dollars in 2025, followed by China (18.7 trillion) and Japan (9.8 trillion). The North American GDP is 30 billion.
The US lives beyond its means, going into debt, because lenders trust the fiat currency, the dollar. The Austrian Empire was also in debt in a similar way and not all the gold in America was useful to pay the interest on the debt. Ray Dalio maintains in his books that ““The cause of the fall of all empires has been debt.”.
Mohamed El-Erian (former PIMCO; today chief economist at Allianz) maintains a similar thesis. And, the most recent ‘Fiscal Monitor’ of the International Monetary Fund (IMF) warns that the “public finances of the great powers, with the United States at the helm, have become a global systemic risk”.
The real reason why Trump launched the trade war in April was to obtain revenue, via tariffs, to alleviate deficits and debt. According to the Treasury Department and the Congressional Budget Office, tariff revenues will reach 195 billion in 2025 (0.9% of GDP), insufficient to significantly reduce the public deficit and debt, even in ten years.
Part of the North American public debt is corporate debt: 10 trillion dollars in 2025. The majority is debt from technology firms to finance investments in artificial intelligence infrastructure. The government is no stranger to these investments and, for example, guarantees the loan of one billion dollars to rebuild the “Three Mile Island” nuclear power plant, which Microsoft needs to provide energy to its AI.
The benefits of ICT firms, insufficient guarantee…
Until September, the premise was accepted that the record profits of BigTech were sufficient to support investments in AI. In autumn, doubts arose: Michael Burry (investor famous for anticipating the subprime mortgage crisis) and Peter Thiel (co-founder of PayPal and Palantir) demonstrated with a simple experiment that the assumption has holes: they sold their positions in Nvidia, making profits. Burry’s thesis is that BigTech’s profits “are inflated because companies have extended the depreciation of their assets over time.” Few have denied the argument of Michael Burry, who earned 1.2 billion from the sale of his Nvidias.
Other authorized voices also raise the voice of alarm: Daren AcemogluNobel Prize winner in Economics for measuring the productivity generated by AI, the Federal Reserve (FED) in its recent “Financial Stability Report” and the IMF, have linked “specifically, investor enthusiasm for AI, with risks of financial instability”writes the FED.
The West has lived without major shocks since the Great Recession (2007-2009). But, as they maintain Kenneth Rogoff y Carmen Reinhart in his book «This Time Is Different: Eight Centuries of Financial Folly»financial crises are repeated with similar patterns of debt and bubbles. Analysts and politicians deceive themselves (“this time it’s different«) and they fall into the same error. Almost no one should now want to suffer a recession motivated by what El-Erian calls the “rational bubble of Artificial Intelligence.” He calls it ‘rational’ because of the promise of increased productivity. But, “like every bubble, the AI bubble will end in tears,” El-Erian told Andrew Sorkin a CNBC.
Three years since OpenAI launched ChatGPT, the benefits of AI remain promising. Even so, BigTech (Apple, Alphabet, Amazon, Meta, Microsoft, Nvidia, Tesla, Oracle, etc.) have committed investment in AI of 3 trillion dollars, until 2030.
We warned for a year and a half that investors were disappointed with Artificial Intelligence because they did not see a return on their investment. Today, frustration leads to anger. One false step – poor results from a technology firm, for example – and the promise could collapse.
Nvidia’s results, necessarily, had to be spectacular. And so they were.
Jorge Díaz-Cardiel. Managing Partner of Advice Strategic Consultants. Economist, Sociologist, Lawyer, Historian, Philosopher and Journalist. Author of more than a thousand articles on economics and international relations, he has published twenty books.
