NVIDIA's Deal-Making Spree Ignites Concerns Amid AI Boom
NVIDIA's (NASDAQ:NVDA) deal-making practices have sparked concerns about circularity and potential risks, reminiscent of the AI bubble burst in 2000-01. However, analysts argue that these deals are not necessarily a cause for alarm.
Investors might be hesitant to view these rapid-fire deals as adding to the web of risks that could unravel once the AI bubble bursts. Nonetheless, NVIDIA doesn't need to push its hardware to anyone; instead, it's struggling to keep up with demand, which has been off the charts.
Jensen Huang's ability to spot potential across the AI waters is seen as a significant advantage for the company. With an obscene amount of free cash flow flowing in each quarter, NVIDIA can reinvest in its own growth engine and beef up its many moats, making it smart to bet on other companies that stand to gain significantly from the AI revolution.
The deals are helping accelerate the AI market as a whole by enabling frontier labs to get the resources they need to grow. The company's selling to deep-pocketed giants that can't seem to get enough of its hardware, making NVIDIA's appetite for deal-making a potentially positive driver for the stock.