Talk of an AI investment bubble has been circulating for well over a year. And although Nvidia’s latest quarterly performance was meant to calm those fears, the results didn’t entirely do the job.
This week, Nvidia reported year-over-year revenue and profit growth exceeding 60%, beating estimates by a wide margin. CEO Jensen Huang described demand as “off the charts,” and the company projected around $65 billion in revenue for the coming quarter — yet another figure ahead of analyst expectations.
Nvidia’s leadership insists that the strength of its numbers, combined with rising output from major AI companies and massive spending on AI infrastructure, shows that bubble warnings are exaggerated. “People keep talking about an AI bubble,” Huang told analysts. “From where we stand, we see something very different.” A handful of analysts agree with him, but the broader market was less convinced. Nvidia’s stock briefly rose after the report but slid back into negative territory, ending the week down 1%, though still up nearly 30% this year.
In short: Nvidia answered many questions about present-day AI demand — but shifting public perception will take more.
IS AN AI BUST REALLY COMING?
Nvidia CFO Colette Kress estimates that annual global spending on AI infrastructure could hit $3 trillion to $4 trillion by the end of the decade. She added that demand is still outpacing what the company anticipated. Major tech firms alone are expected to allocate around $400 billion this year to build out AI and cloud systems — not only to meet user demand, but also to ensure they don’t fall behind competitors.
It makes sense for Nvidia to project long-term confidence. The company has become the face of AI hardware, and expectations surrounding its growth are enormous. Even if the monetization of generative AI remains uncertain, Nvidia still powers many of today’s existing cloud, data, and software services. That gives the company a cushion, even if new AI applications take longer than expected to deliver financial returns.
Huang emphasized this point, noting that the world runs on an enormous amount of non-AI software — everything from data processing tools to engineering simulations. Much of the hardware that powers this software has already shifted away from conventional CPUs toward Nvidia’s GPU technology, embedding the company deeply into the broader tech ecosystem.
Kress also highlighted strong results from Nvidia’s partners: Meta reported increased engagement thanks to AI-driven recommendation systems; Anthropic forecasted $7 billion in annual revenue; and Salesforce claimed a 30% boost in engineering efficiency after adopting AI coding tools. These examples were meant to reinforce the idea that AI is generating real productivity, not just hype.
Several analysts echoed this sentiment. Some called the current moment “year three of a decade-long AI build-out,” arguing that fears of a bubble are largely unfounded. Others see the skepticism surrounding Nvidia’s stock as a chance for long-term investors to enter.
BUT DOUBTS CONTINUE
Despite the optimistic outlook, many market observers remain cautious. There are lingering concerns about whether tech companies can sustain their extraordinary AI spending levels — especially as Nvidia has extended financial support to risky, unprofitable partners like OpenAI and Anthropic. Recent comments from OpenAI’s CFO about requiring government assistance for AI-related debt only intensified those concerns before the company attempted to soften the message.
Even if Nvidia is protected by its broad customer base, investors remain uneasy about what a slowdown could mean for the rest of the market. Some fund managers argue that while Nvidia delivered impressive results, major questions about the stability of the AI investment cycle still haven’t been resolved — only delayed until the next earnings season.
For now, Nvidia still has work to do convincing everyone that the AI boom is built to last — not poised for a sudden pop.
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