Unpopular opinion: when this AI bubble eventually pops, NVIDIA will be seen as one of the biggest culprits

NVIDIA struck gold with their chips at the right time, and insisted on absolutely mugging their customers with 70% margins on their chips.

It made NVIDIA insanely rich, blew up its market cap but has now drowned all their customers in so much debt, they may go under before they can make any meaningful returns on the investment.

I think Jensen miscalculated how quickly his customers will be able to make returns on the hardware and priced it aggressively, at 70%+ margins.

Now NVIDIA is stuck in this place where they have an ocean of cash, while their customers are scrounging for money, struggling to stay afloat. NVIDIA cannot recycle money back to their customers without it stinking up high heaven, but they are also realising they fleeced their customers so hard, most of them can’t keep going for another year. NVIDIA is returning tens of billions to its investors as they have more money than they know what to do with, while their customers like OpenAI are offering 17.5% returns to raise $4 billion from private equity.

If openAI IPO fails, it’s game over. And NVIDIA will be one of the biggest reasons this bubble pops. They basically bankrupted the industry with their insane pricing to the point their customers did not have enough runway to actually build a viable business with this hardware. Imagine if NVIDIA GPUs were half the price it is, most of these companies would have a much bigger runway and a chance at actually building a financially sound business. Even in that case NVIDIA would have upwards of 30% margin but would have a much more sustainable customer base.

They can’t lower prices now because that would immediately depreciate value of $100s of billions of dollars worth GPUs in the field, and that depreciation would throw everyone’s profitability math out the window. Companies like Coreweave have pledged GPUs for lines of credit and would get margin calls if NVIDIA drops GPU pricing.

I think this explains Jensen’s bizarre “We have hit AGI” comments. He needs the market to think returns on all that investment is around the corner so that his customers keep getting $$$. He is realising he has milked his customers to death at this point.

I also think he orchestrated the SoftBank move of selling their NVIDIA holdings to invest it all in OpenAI. That’s their way of handing openAI more liquidity until the IPO.

Insane prices of GPUs, and the subsequent debt that these companies went into to buy them may have killed Jensen’s golden goose. All these companies are now hoping IPO goes well and they get more cash, if not the whole thing grinds to a halt.

Edit: before people grab their pitchforks, I am not saying what they did is illegal. They have a commodity everyone wants, they priced it as high as they could. Nothing wrong with that. Except, now their customers are broke.