Fears over AI bubble bursting grow in Silicon Valley (www.bbc.com)

🤖 AI Summary
Silicon Valley is intensifying warnings that the current AI boom may be a financial bubble, driven by extraordinary valuations, interlocking deals and massive hardware commitments rather than purely organic demand. The debate peaked around OpenAI’s high-profile financing arrangements — a reported $100bn tie-up with Nvidia, multibillion equipment purchases from AMD, and cloud and investment pacts with Microsoft, Oracle and others — even as regulators and institutions (Bank of England, IMF, JP Morgan) flag elevated risk. AI firms have powered roughly 80% of US stock-market gains this year and Gartner projects up to $1.5tn in AI spending before 2025, but OpenAI still isn’t profitable, prompting worries that “vendor financing” and circular investments could be inflating demand and valuations. Technically, the story centers on surging demand for GPUs and data-center capacity to train and run large models, which has led chipmakers and cloud providers to act as both vendors and backers. That creates concentrated counterparty risk and could leave stranded infrastructure if funding retrenches — from idle hyperscale data centers to excess GPU inventory — with environmental and macroeconomic knock-on effects. Skeptics warn a collapse could ripple through the broader economy; optimists counter that overinvestment might nonetheless build durable AI compute plumbing that enables future innovation. Either way, capital structure, hardware supply chains, and cloud economics will determine whether current momentum is sustainable or a speculative peak.
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