The hole lurking in big tech’s trillion-dollar AI blitz
As fears over a potential AI bubble grow, many analysts are wondering whether this groundbreaking technology will lose its value faster than expected.
Unsurprisingly, such claims have been seized upon by short-sellers, keen to explore any suggestion that the tech-induced stock market frenzy is nearing its end.
The threat of faster-than-expected depreciation is important because companies account for the cost of IT hardware assets over several years.
- Recently, tech giants have taken the view that Nvidia’s graphics processors will remain effective and profitable for longer, increasing their expected lifespans from three to five years.
Yet even so, concerns could be enough to rattle investors.
While tech behemoths like Meta and Amazon should be able to absorb the hit from missed depreciation targets, smaller start-ups may be more at risk.
For example, CoreWeave saw its shares plunge 16pc earlier this week after disappointing results, with its valuation down by a third since a tech-fuelled sell-off at the end of October.
All of which suggests that the importance of Nvidia’s miracle chips goes beyond just its own balance sheet.
In fact, they could prove to be the difference between the boom and bust of AI’s trillion-dollar investment splurge."
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