The $100B Nvidia-OpenAI Deal: Proof of a Boom or a “Circular” Bubble

At the heart of the intense debate over Nvidia’s new $5.05 trillion valuation is its landmark $100 billion deal with OpenAI. How one views this single deal largely determines whether they see a sustainable boom or a dangerous, self-inflating bubble.
Nvidia, which crossed the $5 trillion threshold Wednesday, is the undisputed king of the AI chip market. Its valuation grew by $1 trillion in just three months, a testament to the market’s belief in an AI-powered future.
For the bulls, the OpenAI deal is exhibit A. They see it, alongside a $500 billion order book and partnerships with Uber, Nokia, and the US government, as proof that the world’s most important companies are betting their future on Nvidia’s technology.
For the bears, this same $100 billion deal is a massive red flag. Skeptics, including figures from the IMF and Bank of England, have labeled the deal “circular.” They argue it’s not a simple case of supply and demand, but a financial maneuver that inflates the valuations of both companies, symptomatic of a bubble.
This skepticism is compounded by a stark reality on the ground: analysts report that “nearly all AI pilot programs in businesses fail.” This suggests the massive spending on chips is speculative, not yet tied to proven profits, making the $5T valuation a point of global economic concern.