John Cassidy
When Jensen Huang, the chief executive of the chipmaker Nvidia, met with Donald Trump in the White House last week, he had reason to be cheerful. Most of Nvidia’s chips, which are widely used to train generative artificial-intelligence models, are manufactured in Asia. Earlier this year, it pledged to increase production in the United States, and on Wednesday Trump announced that chip companies that promise to build products in the United States would be exempt from some hefty new tariffs on semiconductors that his Administration is preparing to impose. The next day, Nvidia’s stock hit a new all-time high, and its market capitalization reached $4.4 trillion, making it the world’s most valuable company, ahead of Microsoft, which is also heavily involved in A.I.
Welcome to the A.I. boom, or should I say the A.I. bubble? It has been more than a quarter of a century since the bursting of the great dot-com bubble, during which hundreds of unprofitable internet startups issued stock on the Nasdaq, and the share prices of many tech companies rose into the stratosphere. In March and April of 2000, tech stocks plummeted; subsequently many, but by no means all, of the internet startups went out of business. There has been some discussion on Wall Street in the past few months about whether the current surge in tech is following a similar trajectory. In a research paper entitled “25 Years On; Lessons from the Bursting of the Technology Bubble,” which was published in March, a team of investment analysts from Goldman Sachs argued that it wasn’t: “While enthusiasm for technology stocks has risen sharply in recent years, this has not represented a bubble because the price appreciation has been justified by strong profit fundamentals.” The analysts pointed to the earnings power of the so-calle
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