James Anderson, a former tech investor, has voiced concerns that Nvidia's substantial $100 billion investment in OpenAI mirrors the excesses seen during the dotcom bubble. While acknowledging his admiration for Nvidia, Anderson finds the scale and pace of AI valuation increases, such as OpenAI's surge to $500 billion in under a year, unsettling. He draws parallels between current AI investment patterns and the inflated valuations of the late 1990s, noting similarities to the telecom sector's unsustainable growth.
Anderson highlights that Nvidia's investment raises questions about how much of the AI boom is simply a reflection of Nvidia's own capital being recycled within the industry. This 'circular' investment model, where Nvidia invests in companies that then purchase its chips, creates a closed-loop system that may not accurately represent genuine market demand or long-term sustainability.
Despite these concerns, Anderson acknowledges Nvidia's strong position, citing its 'persistent exponential progress' and competitive advantages in hardware, software, culture and leadership. However, he cautions that the rapid inflation of AI company valuations warrants careful scrutiny to avoid a repeat of past market bubbles.
