Is the AI Revolution “Circular”? Skeptics Question Nvidia’s $5T Valuation

Skeptics are raising a troubling question about the AI revolution: is it a “circular” economy? This criticism is at the center of the “bust” argument against Nvidia’s new $5.05 trillion valuation, suggesting the boom is an illusion.
The chipmaker’s rise is undeniable, crossing the $5T mark after gaining $1T in value in just three months. Its order book stands at $500 billion. The prime example of this “circular” logic, accordingto critics, is the $100 billion deal between Nvidia and OpenAI.
The argument is that AI companies raise venture capital, spend it on Nvidia chips to build models, which in turn justifies higher valuations for both, allowing them to raise and spend even more, all without generating significant profit.
This concern is amplified by formal warnings from the Bank of England and the IMF, which both see signs of a dangerous bubble.
The counter-argument, from the “boom” perspective, is that this is simply investment, not a circular trap. They point to partnerships with real-economy companies like Uber, Nokia, and the US government as proof of genuine integration. But the core “bust” argument remains: analysts warn “nearly all AI pilot programs in businesses fail.” If profits never materialize, this $5T “circular” economy could spin out of control.