On paper, graphics card designer Nvidia is now worth over $5 trillion, more than the major French, German, and Italian stock market indexes combined. Its market capitalization is now greater than the GDP of Germany ($4.66 trillion) or France ($3.16 trillion).
But it’s only on paper.
For the first time in 25 years, global investments in companies that are not profitable, such as AI startups, and may never be profitable, this week exceeded the total number of stock purchases and investments made in companies with a proven profitable business model. We are approaching a point of imbalance in the global market. They are not profitable and don’t want to be, till the capitalization from stock exchange continues. They are addict to easy money.
But it’s still only on paper.
The latest $38 billion financing package is like a dog biting its tail : Jeff Bezos, the head of Amazon, is going to pay billions to Jensen Huang to power OpenAI with Nvidia chips, and Huang has announced that Nvidia will invest hundreds of millions of dollars in Sam Altman’s AI products. Everyone’s cozying up to each other : suppliers are customers, investors and partners, of each others and at the same time. Who says inbreeding ?
It’s always on paper that everything looks fine.
The circular flows, detected by Morgan Stanley (see graph), are reminiscent of the toxic entanglement between banks and insurers via credit derivatives before 2008. With the same risk of debt concentration and the same threat of contagion.
It won’t last long ! The paper will be erase soon.
You better be liquid this time, guys…