Nvidia's Repeated Market Value Plunges Spark Concerns Over AI Spending Surge

As of 2025-08-05T02:59:15+00:00, the article reports that Nvidia, a leading technology company, has lost half its market value seven times since going public in 2000. This turbulent history raises concerns about the impact of the current surge in artificial intelligence (AI) spending.

While U.S. stocks have continued to reach new highs in recent years, the article suggests that the bigger risk may lie in the hundreds of billions of dollars invested in AI. The release of ChatGPT in 2022 has led to a massive $23 trillion expansion in the U.S. total market cap, more than the combined market caps of Japan, Europe, and the U.K.

However, the article draws parallels to the tech boom of the 1990s, where capital spending on technology rose from 8% to 11.5% of GDP over seven years. The consensus view then was that this growth was structural, but the spending eventually stalled, causing stocks to tumble.

Similarly, the article warns that the current surge in AI-oriented spending could be a "dud," with the recent disappointment in semiconductor-equipment manufacturing stocks potentially foreshadowing trouble ahead. The article cites warnings from companies like Tokyo Electron and ASML about weakening demand and uncertainty due to higher tariffs and geopolitical tensions.

The article suggests that the fallout from a potential disappointment in Nvidia, with its $4.2 trillion market cap, could be far-reaching. It notes that a significant portion of the recent wealth creation has been reliant on the premise of AI-driven productivity gains, and a pullback in valuations could trigger a "nasty negative wealth effect."