October 8, 2025 • 15 mins
OpenAI and AMD. OpenAI and Nvidia. Oracle and OpenAI. Nvidia and Oracle. There is so much AI-on-AI dealmaking happening in the industry right now, it can be hard to keep track of who has a deal with who — and increasingly, it seems everyone has a deal with everyone else.
Today on the Big Take, host Sarah Holder speaks with technology reporter Emily Forgash about the AI giants making circular deals — and why some analysts and experts are concerned about the trend.
Read more: OpenAI, Nvidia Fuel $1 Trillion AI Market With Web of Circular Deals
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Episode Transcript
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Speaker 1 (00:00):
Bloomberg, Audio Studios, podcasts, radio News.
Speaker 2 (00:08):
This week, two of the biggest players in the AI
industry struck a deal. Open Ai, which owns chat GPT,
agreed to use tens of billions of dollars worth of
AI chips over multiple years from Advanced micro Devices or AMD.
An AMD set the stage for open Ai to become
one of its largest shareholders.
Speaker 1 (00:30):
It speaks to the commitments that some of these AI
infrastructure companies are making with open Ai to facilitate this
AI boom that's happening.
Speaker 2 (00:39):
Emily Foregash is a tech reporter at Bloomberg.
Speaker 1 (00:41):
The CEO of AMD and then the president of open
Ai were both on Bloomberg and they both spoke about
how this is a win win for each other.
Speaker 2 (00:49):
This deal is.
Speaker 1 (00:50):
A win for AMD, it's a win for open Ai,
and it's a win for our shareholders. We really think
of this as an industry wide effort. If open Ai wins,
that's a win for AMD because AMDs chips will be
used for part of the inferencing and vice versa when
AMD does well. Now open Ai has a stake in
that company.
Speaker 2 (01:08):
If this arrangement sounds a bit circular to you, that's
because it is an AI chip maker and an AI
developer making a multi billion dollar bet on each other.
It's not the only deal open ai has broken recently
with the major AI chip maker.
Speaker 1 (01:25):
The circular nature has kind of come to attention in
recent weeks because of the scale, the size, the frequency
of these deals. Part of it was tipped off in
large part by in Vidia's up to one hundred billion
dollar investment in open Ai.
Speaker 2 (01:39):
Open ai and AMD open Ai and in VideA. There's
a lot of AI on AI investment going on right now.
Speaker 1 (01:46):
Open ai has a three hundred billion dollar deal with
Oracle to compete on Oracle's cloud network space. In Vidia
and core Weave, another cloud provider, also has a relationship.
In Vidia bought six point three billion dollars of cloud
services from open Ai also has a deal with core
Weave to pay as much as twenty two point four
billion dollars for that compute space as well. Open Ai
(02:09):
and AMD had the deal that happened on Monday.
Speaker 2 (02:12):
Obviously, AI companies say these kinds of large, reciprocal and
sometimes overlapping deals are what's needed to meet growing demand
for their tech, But as more and more money gets
invested in the space. These unorthodox business arrangements are also
raising flags for industry analysts who are starting to wonder
(02:33):
is the trillion dollar AI market being propped up by
the industry itself.
Speaker 1 (02:38):
The circular financing concern comes hand in hand with concerns
over an AI bubble, and so when you're putting that
much money into an industry that hasn't returned on those
investments at this point in time, you could worry that
if it never returns on those investments, or if there's
never turning a profit, then the whole thing will kind
of combust.
Speaker 2 (03:00):
I'm Sarah Holder, and this is the big take from
Bloomberg News today on the show why a network of
circular AI deals is fueling concerns about the possibility of
a bubble and what could happen if it pops. Over
the last few months, there's been a frenzy of deal
(03:21):
making in the AI space.
Speaker 1 (03:22):
And everyone's talking about AI. Everyone's talking about also this
deal between open Ai and AMD adding.
Speaker 2 (03:28):
Fuel to the AI frenzy.
Speaker 1 (03:30):
The deal expected to generate tens of billions of dollars
in new revenue, a historic collaboration.
Speaker 2 (03:36):
As part of the deal, Intel is going to use
in videographic technology and upcoming PC chips. Emily Forgash, who
covers tech for Bloomberg, has been covering these deals closely,
and she says a lot of them have involved two
dominant AI companies.
Speaker 1 (03:51):
The center of the web is definitely in Vidian Open
Ai in.
Speaker 2 (03:54):
Video designs chips that power AI systems, and open Ai
developed AI and AI driven products like chat GPT. In September,
just two weeks before open Ai announced its deal with AMD,
open Ai and Nvidia announced a partnership of their own.
Nvidia agreed to invest as much as one hundred billion
(04:15):
dollars in open Ai to build data centers, and open
Ai agreed to fill those sites with millions of Nvidia chips.
Emily says, in some ways, the deal just made good
business sense.
Speaker 1 (04:29):
Part of that is just the position that Nvidia has
found itself in. It's the wealthiest company in the entire world,
the biggest company in the entire world, and it has
dominance in chips.
Speaker 2 (04:37):
But it also raised eyebrows among industry analysts.
Speaker 1 (04:41):
The circular nature of investing in a company like open ai,
which then needs compute capacity which could ultimately use in
Vidia's chips in the end and give back to Nvidia
in that way. That's kind of more recently becoming a concern.
It's not necessarily planned to be circular, but analysts have
pointed out the fact that when you froth up a
(05:02):
market like this, it could lead to a bubble, and
the original sin of this bubble could have been like
circular financing.
Speaker 2 (05:08):
The industry has seen a number of other circular financing
deals recently between open ai and Oracle in Nvidia and
core Weave, Open Ai and core Weave, Open Ai and AMD,
and in Vidia has also made investments in smaller AI companies.
Speaker 1 (05:27):
In Vidia doesn't just invest hundreds of billions of dollars
into the biggest companies like open Ai. It also has
been funding a lot of AI startups, in large part
to push AI innovation forward, with the thinking that if
you invest in the smaller AI startups and kind of
give them a boost, then they'll ultimately get somewhere, maybe
not somewhere as big as open ai, but maybe somewhere close.
Speaker 2 (05:46):
Why are open Ai and Nvidia at the center of
so many of these deals.
Speaker 1 (05:50):
Part of the reason in Nvidia can put its hands
in so many places is because it has so much
money to do so. But also, as I mentioned before,
in Vidia is the dominant chip make in the US,
and it's competing for that title globally as well. So
most of the high level AI capacity comes from in
videos advanced chips. Open ai was just very much ahead
(06:13):
of the curve. It has more than seven hundred million
weekly users now of chat gibt. It's just becoming so
well known and so used. It's almost gotten like verb status,
the way that we say, oh, I'm just going to
Google that, and by that we mean we're going to
search on the Internet. Now I'm kind of hearing people
say I'm just going to chat gbt that rather than
being like I'm going to search on an LM or
(06:33):
I'm going to search through one of these chatbots. It's
chat gbt that they go to. And so that kind
of global dominance that both companies have and the amount
of money that they both are dealing with. At this
point in time, open ai just reached a five hundred
billion dollar valuation. Those two are making it kind of
ultimately the center of this web.
Speaker 2 (06:53):
But does open a I have the revenue to support
these kinds of deals. From my understanding, when I chat
GPT something that's free.
Speaker 1 (07:00):
Open Ai does have high revenue, but it also burns cash.
It's not a profitable company at this point in time.
That is one of the key concerns of this circular
financing leading to an AI bubble, because companies are just
putting so much money into not just open ai, but
the other companies that open ai surrounds itself with, and
it's just kind of propping up the entire AI sector.
(07:22):
There's one hundred billion dollars from Nvidian open Ai, There's
three hundred billion dollars with open ai and Oracle. There's
as much as twenty two billion dollars between open ai
and core Weave, and those continuing to grow. And then
if you think about how much those companies are also
then spending on compute, spending on chips, the numbers are
just staggering in terms of how much money they're giving
to each other. And so the concern is that all
(07:44):
this money is going in, but none of it will
ever come back out because there will never be a profit.
Speaker 2 (07:49):
And that's the key concern here that a complex, interconnected
web of investments are artificially inflating valuations of these AI
companies before they actually make any money. Is this something
that would normally concern regulators or is this just how
the industry works? In other words, does it just make
(08:11):
sense for AI companies to partner with other AI companies
because their goals are aligned, or is there something else
going on here?
Speaker 1 (08:18):
So whether or not regulars get involved is to be seen,
But at this point in time, it's not necessarily shady
by any means. It's more so just that these companies
have so much money. In Video, for example, has so
much money because of its chip dominance, and it has
an interest in propelling the AI innovation around the world forward.
I think that would kind of be the argument for
(08:40):
why the deals are kind of happening this way, although
they're super new, this kind of way of financing. These
AI companies are using equity, debt, investing in one another,
investing huge tons of money in one another. So it's
kind of like, since AI is rapidly advancing and there's
a huge stake in doing so, these companies are just
pouring in the money as much as they can to
(09:01):
propel that forward.
Speaker 2 (09:02):
So they're using all the tools in their toolbox, including
investing in each other. Yes, yes, coming up. What happens
if the AI boom becomes the AI bust? Frenzied investments
(09:23):
in new startups, rapid growth, frothy valuations. Bloomberg Tech reporter
Emily Foregash says, what's happening in the AI space right
now is reminding some people of another by gone tech era.
Speaker 1 (09:36):
I think a lot of the industry analysts that were
around during the dot com boom especially, are seeing parallels
that are concerning.
Speaker 2 (09:44):
The dot com boom, that moment in the late nineties
when everyone was eager to invest in anything Internet related.
Speaker 1 (09:51):
And people just poured in money, so much money into
these companies, any company that was kind of involved in
developing the Internet at that point in time, and so
when the return on investment just wasn't there, it all
came crashing down. And that's kind of the worry that
we have here. The difference here, though, is some people
would argue, like, there are actual products here. They're being
adopted by so many enterprises and businesses and just consumers
(10:15):
in their everyday life that the bet that people are
making on AI might have a bit of a stronger foundation.
But the question then is, well, where is your profit
to back up all of these huge investments.
Speaker 2 (10:25):
And the other difference with this moment is that AI
companies are spending a lot more than dot com startups were.
Speaker 1 (10:31):
Right, absolutely, each chip is tens of thousands of dollars
each chip, and the compute that the world is using
at this point in time is not just a few chips,
It's lots and lots and lots of chips, and so
this is not a cheap endeavor by any means. Also,
the data centers are massive. They also coust so much
money to build and to then fill with the chips.
Speaker 2 (10:54):
That all means that a potential AI bubble could be
a lot bigger than the dot com bubble, And as
more money pours into the industry for more corners of
the economy, the stakes of that bubble bursting get bigger too.
Speaker 1 (11:08):
Blackrock is in advanced talks to buy a data center
company called Aligned Data Centers with the valuation of forty
billion dollars. This is kind of a forty billion dollar
bet that Blackrock is placing on a data center company
that only has like around six hundred megawatts of live
capacity at this point. They have a lot that's planned,
they have a lot in construction. That's all coming, but
(11:29):
that takes a lot of time. Also, the US government
is involved to a certain extent. The US took a
stake in Intel, which is another provider, a ten percent
stake in Intel using Chips Act funding. Nvidia also now
invests five billion dollars in Intel, and they're planning to
code develop chips together. So that's kind of a narrative
of two rivals becoming partners to kind of boost this
(11:49):
AI boom. And then also the US is taking a
fifteen percent of cut of Nvidia and AMD's chip sales
to China. So just in those three last examples, you
can see how the US government is like somewhat involved.
Speaker 2 (12:02):
Also, how much of the rest of the economy is
being propped up by AI right now. If the AI
bubble bursts, what would it mean for the rest of US.
Speaker 1 (12:11):
Well, the market is propped up by these companies for sure.
It's propping up the New York Stock Exchange other exchanges,
and so if those companies were just all of a
sudden dip even a little bit, you'll see the effects
of that in the stock market at any time.
Speaker 2 (12:23):
In video dips, that's a huge whole market moving in that.
Speaker 1 (12:26):
Yeah, absolutely, you don't necessarily have to care about AI
or the future of open ai, or the future of
Nvidia even to care about this story, because this has
reached into so many other markets, the financial markets, equity markets,
debt markets, real estate markets because data centers are real
places that need to be built. Also, your energy bills
might be higher if you live next to a data center,
(12:46):
So this extends far beyond now at this point the
AI sector.
Speaker 2 (12:51):
If some of this valuation is froth, what metrics can
we look at to get a true sense of how
the AI economy is performing right now and how all
these companies are really doing.
Speaker 1 (13:01):
Open ai is a private company, and it does share
some information about its financials, but that's kind of where
it's a little bit tricky, because even its valuation is
a little bit hard to nail down, because there's valuations
during funding rounds, and then there's valuations during stock sales.
A company like in VideA, though public, reports a lot
about their finances. I think that if in Vidia were
(13:22):
to post declining revenue for some reason in the coming quarters,
people might then look back to this circular financing idea
and be like, is this really paying off in this moment.
Is this a short term pain that will pay off
in the future. But these are kind of questions that
we won't yet know the answers to, and I think
that's what's a little bit nerve wracking sometimes for investors.
Speaker 2 (13:43):
It's a big question with billions of dollars riding on it,
will the bet on AI pay off or will it
break the system.
Speaker 1 (13:51):
Analysts are definitely saying that these big AI companies, their
capacity for innovation, their capacity to return on investment, they
could be leading the whole economy towards a huge boom
in AI, huge boom and money, huge boom and even
further investments, or could go the other way.
Speaker 2 (14:06):
Yes. Stacey Rasgan with Bernstein Research wrote that Sam Altman,
the CEO of open Ai, has the power to crash
the global economy for a decade or take us all
to the promised land. And right now we don't know
which is in the cards.
Speaker 1 (14:22):
Everyone's looking towards open Ai at this moment. It's kind
of like the bell weather for this situation with the
AI boom. If it continues to innovate and if it
can turn a profit and become a profitable company, that
might make all this investment so worth it. But at
the same time, if it's not able to generate profit
quickly enough, and if the innovation doesn't continue, then all
(14:42):
this investment that's kind of circulated around open ai are
near open ai adjacent to open ai that will all
see the negative consequences. It's very hard to detect a
bubble ahead of the bubble, but given that only twenty
five years ago there was a huge dot com crash,
people are certainly more aware of how it could ultimately
(15:03):
come crashing down if the profit returns don't actually manifest.
Speaker 2 (15:12):
This is the Big Take from Bloomberg News. I'm Sarah Holder.
To get more from The Big Take and unlimited access
to all of Bloomberg dot com, subscribe today at Bloomberg
dot com slash podcast offer. If you liked this episode,
make sure to follow and review The Big Take wherever
you listen to podcasts. It helps people find the show.
Thanks for listening. We'll be back tomorrow.
Bloomberg, Audio Studios, podcasts, radio News.
Speaker 2 (00:08):
This week, two of the biggest players in the AI
industry struck a deal. Open Ai, which owns chat GPT,
agreed to use tens of billions of dollars worth of
AI chips over multiple years from Advanced micro Devices or AMD.
An AMD set the stage for open Ai to become
one of its largest shareholders.
Speaker 1 (00:30):
It speaks to the commitments that some of these AI
infrastructure companies are making with open Ai to facilitate this
AI boom that's happening.
Speaker 2 (00:39):
Emily Foregash is a tech reporter at Bloomberg.
Speaker 1 (00:41):
The CEO of AMD and then the president of open
Ai were both on Bloomberg and they both spoke about
how this is a win win for each other.
Speaker 2 (00:49):
This deal is.
Speaker 1 (00:50):
A win for AMD, it's a win for open Ai,
and it's a win for our shareholders. We really think
of this as an industry wide effort. If open Ai wins,
that's a win for AMD because AMDs chips will be
used for part of the inferencing and vice versa when
AMD does well. Now open Ai has a stake in
that company.
Speaker 2 (01:08):
If this arrangement sounds a bit circular to you, that's
because it is an AI chip maker and an AI
developer making a multi billion dollar bet on each other.
It's not the only deal open ai has broken recently
with the major AI chip maker.
Speaker 1 (01:25):
The circular nature has kind of come to attention in
recent weeks because of the scale, the size, the frequency
of these deals. Part of it was tipped off in
large part by in Vidia's up to one hundred billion
dollar investment in open Ai.
Speaker 2 (01:39):
Open ai and AMD open Ai and in VideA. There's
a lot of AI on AI investment going on right now.
Speaker 1 (01:46):
Open ai has a three hundred billion dollar deal with
Oracle to compete on Oracle's cloud network space. In Vidia
and core Weave, another cloud provider, also has a relationship.
In Vidia bought six point three billion dollars of cloud
services from open Ai also has a deal with core
Weave to pay as much as twenty two point four
billion dollars for that compute space as well. Open Ai
(02:09):
and AMD had the deal that happened on Monday.
Speaker 2 (02:12):
Obviously, AI companies say these kinds of large, reciprocal and
sometimes overlapping deals are what's needed to meet growing demand
for their tech, But as more and more money gets
invested in the space. These unorthodox business arrangements are also
raising flags for industry analysts who are starting to wonder
(02:33):
is the trillion dollar AI market being propped up by
the industry itself.
Speaker 1 (02:38):
The circular financing concern comes hand in hand with concerns
over an AI bubble, and so when you're putting that
much money into an industry that hasn't returned on those
investments at this point in time, you could worry that
if it never returns on those investments, or if there's
never turning a profit, then the whole thing will kind
of combust.
Speaker 2 (03:00):
I'm Sarah Holder, and this is the big take from
Bloomberg News today on the show why a network of
circular AI deals is fueling concerns about the possibility of
a bubble and what could happen if it pops. Over
the last few months, there's been a frenzy of deal
(03:21):
making in the AI space.
Speaker 1 (03:22):
And everyone's talking about AI. Everyone's talking about also this
deal between open Ai and AMD adding.
Speaker 2 (03:28):
Fuel to the AI frenzy.
Speaker 1 (03:30):
The deal expected to generate tens of billions of dollars
in new revenue, a historic collaboration.
Speaker 2 (03:36):
As part of the deal, Intel is going to use
in videographic technology and upcoming PC chips. Emily Forgash, who
covers tech for Bloomberg, has been covering these deals closely,
and she says a lot of them have involved two
dominant AI companies.
Speaker 1 (03:51):
The center of the web is definitely in Vidian Open
Ai in.
Speaker 2 (03:54):
Video designs chips that power AI systems, and open Ai
developed AI and AI driven products like chat GPT. In September,
just two weeks before open Ai announced its deal with AMD,
open Ai and Nvidia announced a partnership of their own.
Nvidia agreed to invest as much as one hundred billion
(04:15):
dollars in open Ai to build data centers, and open
Ai agreed to fill those sites with millions of Nvidia chips.
Emily says, in some ways, the deal just made good
business sense.
Speaker 1 (04:29):
Part of that is just the position that Nvidia has
found itself in. It's the wealthiest company in the entire world,
the biggest company in the entire world, and it has
dominance in chips.
Speaker 2 (04:37):
But it also raised eyebrows among industry analysts.
Speaker 1 (04:41):
The circular nature of investing in a company like open ai,
which then needs compute capacity which could ultimately use in
Vidia's chips in the end and give back to Nvidia
in that way. That's kind of more recently becoming a concern.
It's not necessarily planned to be circular, but analysts have
pointed out the fact that when you froth up a
(05:02):
market like this, it could lead to a bubble, and
the original sin of this bubble could have been like
circular financing.
Speaker 2 (05:08):
The industry has seen a number of other circular financing
deals recently between open ai and Oracle in Nvidia and
core Weave, Open Ai and core Weave, Open Ai and AMD,
and in Vidia has also made investments in smaller AI companies.
Speaker 1 (05:27):
In Vidia doesn't just invest hundreds of billions of dollars
into the biggest companies like open Ai. It also has
been funding a lot of AI startups, in large part
to push AI innovation forward, with the thinking that if
you invest in the smaller AI startups and kind of
give them a boost, then they'll ultimately get somewhere, maybe
not somewhere as big as open ai, but maybe somewhere close.
Speaker 2 (05:46):
Why are open Ai and Nvidia at the center of
so many of these deals.
Speaker 1 (05:50):
Part of the reason in Nvidia can put its hands
in so many places is because it has so much
money to do so. But also, as I mentioned before,
in Vidia is the dominant chip make in the US,
and it's competing for that title globally as well. So
most of the high level AI capacity comes from in
videos advanced chips. Open ai was just very much ahead
(06:13):
of the curve. It has more than seven hundred million
weekly users now of chat gibt. It's just becoming so
well known and so used. It's almost gotten like verb status,
the way that we say, oh, I'm just going to
Google that, and by that we mean we're going to
search on the Internet. Now I'm kind of hearing people
say I'm just going to chat gbt that rather than
being like I'm going to search on an LM or
(06:33):
I'm going to search through one of these chatbots. It's
chat gbt that they go to. And so that kind
of global dominance that both companies have and the amount
of money that they both are dealing with. At this
point in time, open ai just reached a five hundred
billion dollar valuation. Those two are making it kind of
ultimately the center of this web.
Speaker 2 (06:53):
But does open a I have the revenue to support
these kinds of deals. From my understanding, when I chat
GPT something that's free.
Speaker 1 (07:00):
Open Ai does have high revenue, but it also burns cash.
It's not a profitable company at this point in time.
That is one of the key concerns of this circular
financing leading to an AI bubble, because companies are just
putting so much money into not just open ai, but
the other companies that open ai surrounds itself with, and
it's just kind of propping up the entire AI sector.
(07:22):
There's one hundred billion dollars from Nvidian open Ai, There's
three hundred billion dollars with open ai and Oracle. There's
as much as twenty two billion dollars between open ai
and core Weave, and those continuing to grow. And then
if you think about how much those companies are also
then spending on compute, spending on chips, the numbers are
just staggering in terms of how much money they're giving
to each other. And so the concern is that all
(07:44):
this money is going in, but none of it will
ever come back out because there will never be a profit.
Speaker 2 (07:49):
And that's the key concern here that a complex, interconnected
web of investments are artificially inflating valuations of these AI
companies before they actually make any money. Is this something
that would normally concern regulators or is this just how
the industry works? In other words, does it just make
(08:11):
sense for AI companies to partner with other AI companies
because their goals are aligned, or is there something else
going on here?
Speaker 1 (08:18):
So whether or not regulars get involved is to be seen,
But at this point in time, it's not necessarily shady
by any means. It's more so just that these companies
have so much money. In Video, for example, has so
much money because of its chip dominance, and it has
an interest in propelling the AI innovation around the world forward.
I think that would kind of be the argument for
(08:40):
why the deals are kind of happening this way, although
they're super new, this kind of way of financing. These
AI companies are using equity, debt, investing in one another,
investing huge tons of money in one another. So it's
kind of like, since AI is rapidly advancing and there's
a huge stake in doing so, these companies are just
pouring in the money as much as they can to
(09:01):
propel that forward.
Speaker 2 (09:02):
So they're using all the tools in their toolbox, including
investing in each other. Yes, yes, coming up. What happens
if the AI boom becomes the AI bust? Frenzied investments
(09:23):
in new startups, rapid growth, frothy valuations. Bloomberg Tech reporter
Emily Foregash says, what's happening in the AI space right
now is reminding some people of another by gone tech era.
Speaker 1 (09:36):
I think a lot of the industry analysts that were
around during the dot com boom especially, are seeing parallels
that are concerning.
Speaker 2 (09:44):
The dot com boom, that moment in the late nineties
when everyone was eager to invest in anything Internet related.
Speaker 1 (09:51):
And people just poured in money, so much money into
these companies, any company that was kind of involved in
developing the Internet at that point in time, and so
when the return on investment just wasn't there, it all
came crashing down. And that's kind of the worry that
we have here. The difference here, though, is some people
would argue, like, there are actual products here. They're being
adopted by so many enterprises and businesses and just consumers
(10:15):
in their everyday life that the bet that people are
making on AI might have a bit of a stronger foundation.
But the question then is, well, where is your profit
to back up all of these huge investments.
Speaker 2 (10:25):
And the other difference with this moment is that AI
companies are spending a lot more than dot com startups were.
Speaker 1 (10:31):
Right, absolutely, each chip is tens of thousands of dollars
each chip, and the compute that the world is using
at this point in time is not just a few chips,
It's lots and lots and lots of chips, and so
this is not a cheap endeavor by any means. Also,
the data centers are massive. They also coust so much
money to build and to then fill with the chips.
Speaker 2 (10:54):
That all means that a potential AI bubble could be
a lot bigger than the dot com bubble, And as
more money pours into the industry for more corners of
the economy, the stakes of that bubble bursting get bigger too.
Speaker 1 (11:08):
Blackrock is in advanced talks to buy a data center
company called Aligned Data Centers with the valuation of forty
billion dollars. This is kind of a forty billion dollar
bet that Blackrock is placing on a data center company
that only has like around six hundred megawatts of live
capacity at this point. They have a lot that's planned,
they have a lot in construction. That's all coming, but
(11:29):
that takes a lot of time. Also, the US government
is involved to a certain extent. The US took a
stake in Intel, which is another provider, a ten percent
stake in Intel using Chips Act funding. Nvidia also now
invests five billion dollars in Intel, and they're planning to
code develop chips together. So that's kind of a narrative
of two rivals becoming partners to kind of boost this
(11:49):
AI boom. And then also the US is taking a
fifteen percent of cut of Nvidia and AMD's chip sales
to China. So just in those three last examples, you
can see how the US government is like somewhat involved.
Speaker 2 (12:02):
Also, how much of the rest of the economy is
being propped up by AI right now. If the AI
bubble bursts, what would it mean for the rest of US.
Speaker 1 (12:11):
Well, the market is propped up by these companies for sure.
It's propping up the New York Stock Exchange other exchanges,
and so if those companies were just all of a
sudden dip even a little bit, you'll see the effects
of that in the stock market at any time.
Speaker 2 (12:23):
In video dips, that's a huge whole market moving in that.
Speaker 1 (12:26):
Yeah, absolutely, you don't necessarily have to care about AI
or the future of open ai, or the future of
Nvidia even to care about this story, because this has
reached into so many other markets, the financial markets, equity markets,
debt markets, real estate markets because data centers are real
places that need to be built. Also, your energy bills
might be higher if you live next to a data center,
(12:46):
So this extends far beyond now at this point the
AI sector.
Speaker 2 (12:51):
If some of this valuation is froth, what metrics can
we look at to get a true sense of how
the AI economy is performing right now and how all
these companies are really doing.
Speaker 1 (13:01):
Open ai is a private company, and it does share
some information about its financials, but that's kind of where
it's a little bit tricky, because even its valuation is
a little bit hard to nail down, because there's valuations
during funding rounds, and then there's valuations during stock sales.
A company like in VideA, though public, reports a lot
about their finances. I think that if in Vidia were
(13:22):
to post declining revenue for some reason in the coming quarters,
people might then look back to this circular financing idea
and be like, is this really paying off in this moment.
Is this a short term pain that will pay off
in the future. But these are kind of questions that
we won't yet know the answers to, and I think
that's what's a little bit nerve wracking sometimes for investors.
Speaker 2 (13:43):
It's a big question with billions of dollars riding on it,
will the bet on AI pay off or will it
break the system.
Speaker 1 (13:51):
Analysts are definitely saying that these big AI companies, their
capacity for innovation, their capacity to return on investment, they
could be leading the whole economy towards a huge boom
in AI, huge boom and money, huge boom and even
further investments, or could go the other way.
Speaker 2 (14:06):
Yes. Stacey Rasgan with Bernstein Research wrote that Sam Altman,
the CEO of open Ai, has the power to crash
the global economy for a decade or take us all
to the promised land. And right now we don't know
which is in the cards.
Speaker 1 (14:22):
Everyone's looking towards open Ai at this moment. It's kind
of like the bell weather for this situation with the
AI boom. If it continues to innovate and if it
can turn a profit and become a profitable company, that
might make all this investment so worth it. But at
the same time, if it's not able to generate profit
quickly enough, and if the innovation doesn't continue, then all
(14:42):
this investment that's kind of circulated around open ai are
near open ai adjacent to open ai that will all
see the negative consequences. It's very hard to detect a
bubble ahead of the bubble, but given that only twenty
five years ago there was a huge dot com crash,
people are certainly more aware of how it could ultimately
(15:03):
come crashing down if the profit returns don't actually manifest.
Speaker 2 (15:12):
This is the Big Take from Bloomberg News. I'm Sarah Holder.
To get more from The Big Take and unlimited access
to all of Bloomberg dot com, subscribe today at Bloomberg
dot com slash podcast offer. If you liked this episode,
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you listen to podcasts. It helps people find the show.
Thanks for listening. We'll be back tomorrow.
Hosts And Creators
Sarah Holder
Saleha Mohsin
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