Economist Tyler Cowen says Nvidia's billions in investments across the AI industry make the sector's boom more durable rather than proving it is a bubble. He points to Nvidia's own financing deals with AI infrastructure builders and argues the real test is simpler: does the technology work.
Nvidia is pouring billions into the same AI companies that turn around and buy its chips, and economist Tyler Cowen says that pattern strengthens the boom instead of exposing it as fake. Cowen told the Prof G Markets podcast on Friday that Nvidia is acting as a kind of lender or buyer of last resort for the sector, with Microsoft, Alphabet and Meta capable of playing similar roles.
Nvidia finances its own customers
Cowen was responding to concerns that Nvidia and other tech giants are helping bankroll an AI industry that then spends heavily on their chips and computing infrastructure. But he argued new technologies often need help getting off the ground, and heavy capital inflows give the sector a better shot at succeeding over time.
Nvidia has moved well beyond selling GPUs. On Aug. 10, it partnered with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR on financing platforms aimed at mobilizing more than $500 billion of third-party capital for AI infrastructure. A week later, Nvidia agreed to guarantee up to $105 billion of OpenAI-linked lease obligations at SB Energy's Ohio data-center campus and invest $1.5 billion in SB Energy, with Nvidia serving as the site's exclusive AI compute provider.
Bubble debate misses the point, Cowen says
Cowen called the bubble debate the wrong discussion and instead compared the AI boom with automobiles in the 1920s, when many carmakers failed without the underlying technology losing its value. He said investors should ask a simpler question instead. According to Cowen: "Does the product work?"
Polymarket traders put the chance of the AI bubble bursting this year at 12%, suggesting little expectation of a near-term collapse. Still, Cowen said debt-financed data centers could create bad macro consequences if the boom reverses, including capital losses and solvency problems, though he expects any fallout to fall well short of the 2008 financial crisis.
Source: Benzinga.com
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