Awaiting a Trigger As Western AI capital expenditure enters the Juglar cycle (a period of cyclical prosperity driven by equipment upgrades), the total market capitalization of U.S. stocks has ballooned to $68 trillion, with the AI sector contributing nearly half ($30 trillion). The "Magnificent Seven" account for 22% of this, with NVIDIA, Microsoft, and Apple each surpassing $4 trillion in market cap, effectively ranking as the "third," "fourth," and "fifth largest economies" globally.
Skepticism about the AI bubble is intensifying alongside soaring valuations: the logic chain has quietly closed, awaiting only a trigger point to unleash heightened volatility.
The U.S. faces a critical challenge—relying solely on AI and robotics to generate robust output, transforming work into an optional activity to achieve universal high income rather than average income. This vision, however, diverges sharply from the interests of current investors and politicians.
Moreover, a larger conflict may stem from the ongoing G2 rivalry.
With AI as the sole growth engine, its fragility becomes glaringly apparent. Microsoft CEO Satya Nadella’s revelation exposes the industry’s glossy facade: a surplus of NVIDIA GPUs sits idle, not due to excess computing power but because of constraints in electricity and physical space.
The current bottleneck, termed "warm node" shortages, stems from data centers lacking sufficient power and cooling capacity. Even cutting-edge chips become "unplugged scrap metal" without the right environment, failing to deliver their intended performance.
Nadella has openly expressed reluctance to over-purchase a specific generation of NVIDIA GPUs, highlighting the escalating conflict between rapid technological iteration and resource efficiency. Accelerated innovation is shortening GPU lifespans, eroding their value retention.
NVIDIA’s rapid advancement, if decoupled from the East’s AI boom, risks losing momentum. Should profit growth falter, the resulting market cap contraction could trigger macroeconomic instability.
If the world’s third-largest economy unleashes volatility, the fallout would be catastrophic. The only viable path forward is deeper integration with the East, including lifting restrictions on high-end chip exports.
Can NVIDIA afford to slash profits? Can politicians abandon their containment strategy? Unlikely.
Thus, a physical rupture may be inevitable to restore equilibrium.
Tech companies, burning through their core earnings, are turning to debt financing. A bubble burst here could inflict broader, longer-lasting damage than equity financing.
Meta has raised $29 billion, including $26 billion in debt; Oracle secured $18 billion via bonds for data center expansion; Elon Musk’s xAI plans a $12.5 billion bond sale as part of a $20 billion funding round.
A significant portion of this debt originates from private credit, often kept off balance sheets and isolated from other operations. Its opacity, leverage, and circularity raise alarms. The Financial Times warns that AI’s growing reliance on debt could expose banks and highly leveraged non-bank entities to default risks if issuers’ credit ratings deteriorate. Opaque bilateral financing agreements may amplify domino effects.
From a two- or three-dimensional view, the bubble may seem intact, but high-dimensional tensions are primed for eruption—only a trigger is needed. The logic is set; the question is what will spark it.