OpenAI CEO Sam Altman has been very vocal about his concerns regarding a potential AI bubble. In an interview with Alex Heath, Altman stated that he is “seeing the first signs” of an “unsustainable silliness.” He went on to warn that firms are building large “amounts of compute” without enough users or revenue to support it. The tech mogul further stated that “If the whole economy blows up, yes, that could impact us.” Let’s discuss if AI-based company like Nvidia (NVDA) and AMD will see their stock price crash if a bubble were to burst.
AI Bubble To Crash Nvidia And AMD Stock?
Sam Altman is not the only voice highlighting the concerns over a potential AI bubble. Another famous proponent is Michael Burry, the analyst who successfully predicted the 2008 housing crisis, which was depicted in the “The Big Short” Hollywood movie with Christian Bale portraying Burry. Burry has publicly stated that he has taken short positions on Nvidia (NVDA) and other AI-based companies. He compares the current situation to that of the dot com bubble of the late 1990s and early 2000s.
Also Read: Nvidia CEO Warns Of AI Bubble: Here’s The Challenge
Even Nvidia (NVDA) CEO Jensen Huang admitted that an AI bubble is coming, but not just yet. Huang said that it may not happen in the next five years. Moreover, Huang says that the challenge lies in how to build things. He stated, “the rate at which we can build the infrastructure is limited by physical things.”
If an AI bubble were to burst, Nvidia (NVDA), AMD, and other companies associated with the AI industry would see massive losses. These companies have driven up production, costs, and development. If demand were to collapse, these companies would be sitting on useless hardware. However, despite low revenue, analysts continue being bullish on AI and AI-based stocks.