AI Bubble on Brink of Bursting: Nvidia Subsidies at Center

The recent rise in artificial intelligence (AI) stocks has raised concerns about an AI bubble. The author argues that history suggests this is likely to happen, citing the dot-com mania at the turn of the century as a precedent.

During the dot-com era, Wall Street pushed internet stocks to extreme valuations, leading to a 45% decline in the S&P 500 index and an 80% loss for the Nasdaq-100. The author warns that AI investors are repeating this pattern by jumping into the space without considering long-term viability.

Nvidia is mentioned as a well-run chipmaker with impressive technology, but the article suggests that its subsidies to customers may be overdone, leading to supply outstripping demand and ultimately bursting the bubble.