“`html
Nvidia and other AI infrastructure vendors are facing scrutiny over potential circular financing models, which could mirror the vendor financing that contributed to the dot-com crash. Investors are particularly concerned as AI companies leverage capital through vendor loans to fuel growth, with Nvidia at the center of this concern.
The risk is exemplified by Cisco’s experience during the dot-com era, where vendor financing inflated demand but led to a sharp decline when the actual market for its products faltered. Today’s AI stack includes vendors like Nvidia, infrastructure players, model providers, and end users, with substantial capital being used to finance GPU purchases and data center expansions.
Despite these risks, major tech players like Microsoft, Google, and Amazon are currently investing heavily in AI, suggesting strong end-market demand. The challenge lies in avoiding overcapacity and ensuring that levels of spending align with sustainable, profitable demand, especially as AI technology continues to develop.
“`
