Does Nvidia share fall mean AI bubble is about to burst?

The numbers behind the end of AI kingpin Nvidia’s brief reign as the world’s biggest company are staggering.

- JAMES MOORE

The US chip manufacturer has had more than $550bn (£433bn) wiped from its value since the sellers got to work and blew the top off its Thursday peak. That’s a more than half-trillion-dollar dive, and the biggest three-day value loss for any company in history.

To put that in context, Britain’s top three most valuable companies – drugs giant AstraZeneca, oil major Shell and international banking group HSBC – are worth a combined £500bn, just a little bit more than has been shaved from Nvidia’s market value over a couple of days. Is this, then, a sign of an AI bubble popping? Time to run for the cover of something nice and safe and boring like, perhaps, HSBC, or another toobig-to-fail bank with solid earnings and regular dividend payments?

Perhaps we can learn a few lessons from history. One of the most famous examples of a bubble – that is, a surge in price without regard to the underlying earnings or true value of an asset – came in the late 1990s, when unwary investors had jumped into anything with a dotcom label. Some of those among the Brit contingent would pump out results boasting of their page impressions rather than the revenue they had earned.