Over the past two years, the stock market has been gripped by an artificial intelligence mania. Companies adopting AI are experiencing soaring stock prices, venture capital is pouring into startups, and tech giants are investing billions in data centers and computing power. This echoes the dot-com era of the early 2000s, when most startups failed and investors lost significant funds.
Nvidia is the brightest example of today's situation. As a leading AI chip producer, it is now the world’s most valuable public company with a capitalization of over $4.5 trillion. In Q3, Nvidia’s revenue reached $57 billion, but 61% of it came from only four clients, likely Microsoft, Meta, Oracle, and other tech giants. Nvidia also invests heavily in startups that are, at the same time, its own clients, creating a closed funding and sales loop. However, many of these startups are still running at losses.
Another factor in the market is competition. Google, Amazon, and Microsoft are developing their AI chips, which could challenge Nvidia's dominance in the future. Meanwhile, Nvidia’s shares are trading at high valuations, based on expectation of continuous growth that may not materialize.
Experts underline the importance of financial literacy for investors amid these dynamics. The current situation is fragile: 61% of Nvidia's income depends on just a handful of clients. If one of them reduces orders, Nvidia’s financials could be seriously affected. The main risk is not technological, but economic: if AI fails to generate returns for these clients, demand may fall sharply.
Possible scenarios range from a full-fledged AI revolution to a market correction with a sharp drop in stock value. Investors should carefully assess risks and remember the importance of fundamental financial literacy.
