What\u2019s not clear to investors or the market is how much of this AI boom is being driven by real, end-user demand \u2014 and how much might be a bubble.<\/p>\n
It all comes back to Nvidia<\/p>\n
Take Nvidia. The world\u2019s leading chipmaker is investing in ChatGPT owner OpenAI to support data centres filled with Nvidia chips.<\/p>\n
Nvidia will invest US$30 billion<\/a> in a private funding round in OpenAI and provide a guarantee of up to US$105 billion<\/a> for an OpenAI data centre in Ohio, as well as investing in the company building it.<\/p>\n That helps OpenAI to remain Nvidia\u2019s best customer, but it also raises the question: is the chipmaker propping up the market?<\/p>\n Nvidia has invested in other AI firms as well, including up to US$10 billion in Anthropic<\/a>, the developer of Claude.<\/p>\n It bought US$2 billion of shares<\/a> in cloud provider CoreWeave to help it speed up the build-out of AI factories that use Nvidia technology.<\/p>\n In total, Nvidia made more than 50 different investment deals<\/a> in AI companies in 2024 alone.<\/p>\n Some of those deals are staged over years or still open-ended. But these circular deals help the AI build-out move faster than it could without Nvidia\u2019s financing.<\/p>\n The Australian story \u2013 Firmus<\/p>\n Data centre builder Firmus \u2013 which last week dramatically abandoned plans to list<\/a> on the Australian Securities Exchange \u2013 provides the local example. Nvidia wears all three hats for Firmus:<\/p>\n Firmus chief executive Oliver Curtis. His $$44 billion IPO failed to win investor support. SuppliedInvestor: Nvidia first invested in Firmus Technologies through the company\u2019s A$330 million capital raising<\/a> in September 2025 to finance data centres in Tasmania. It then participated as an existing investor in two further funding rounds, one in April 2026 and Firmus\u2019s US$2 billion funding round<\/a> in August 2026. Nvidia did not disclose how much it invested.Supplier: Firmus plans to build data centres using Nvidia\u2019s DSX AI factory platform<\/a>, which combines chips, networking and software to provide computing capacityCustomer: Firmus signed Nvidia as a customer for its data centre in Batam, Indonesia, worth up to US$30 billion over six years<\/a>. Meanwhile, Open AI (with its existing relationship with Nvidia) has been named as an anchor customer<\/a> at Firmus\u2019s Malaysian data centres.These circular deals also concentrate risk<\/p>\n The same loop concentrates risk. With Nvidia acting as investor, supplier and financier across the AI sector, trouble at one firm can spread quickly to the others. It also complicates valuations.<\/p>\n For instance, OpenAI\u2019s method of reporting revenues has been queried. Its shares were hit last week when the Financial Times reported<\/a> its annualised revenues were US$20 billion less than the company had suggested.<\/p>\n The Reserve Bank of Australia warned in its recent Financial Stability Review<\/a> that there are \u201cpockets\u201d of higher-risk companies, including those using opaque or circular funding arrangements, where chipmakers provide financing to the companies that purchase their products.<\/p>\n Warning about the possibility of the AI bubble bursting, the RBA said:<\/p>\n One possible trigger could be a shift in sentiment towards the AI investment boom, which is increasingly fuelled by expectations of sustained rapid earnings growth and a debt-financing cycle that is becoming more opaque and circular.<\/p>\n The concern is that nearly all the gains in the US stockmarket have been driven by AI companies.<\/p>\n On Wall Street, chipmakers have contributed around 70% of the total gains<\/a> in 2026 for the S&P 500, and Nvidia is now the index\u2019s largest single company at about 8.06%<\/a> of the index.<\/p>\n This makes the market fragile. If investors begin doubting that OpenAI and similar customers can earn enough in revenue from customers to meet their commitments, Nvidia would be hit on two fronts. First, via lower expected sales and second via its financing exposure to those same companies. That would drag down the whole market, due to its heavy weighting in the key index.<\/p>\n Australians would feel it too. Nearly 90% of households are exposed to AI stocks<\/a>, due to the US shares held through their superannuation funds.<\/p>\n A question of timing<\/p>\n None of this means the AI boom is fake. The issue is timing.<\/p>\n Nvidia, OpenAI and Firmus are betting that future revenue from users and businesses will grow fast enough to pay for today\u2019s massive data centre build-out. Until then, investors, lenders and each other\u2019s companies fill the financing gap.<\/p>\n There is a historical comparison with the 1990s telecom boom. In what was then called the \u201cNew Economy\u201d, equipment makers such as Cisco Systems financed customers<\/a> to buy their equipment. Too much fibre was laid too soon, and investors lost heavily when the stock market bubble burst.<\/p>\n But that fibre lasted decades. The newest AI chips have a shelf life of only a few years. If the expected revenue and demand from business and consumers arrives late or below forecasts, shareholders and super funds will bear the losses.<\/p>\n *Ruipeng Liu<\/a>, Senior Lecturer in finance, Deakin University<\/a> and Sagarika Mishra<\/a>, Associate professor, Deakin University<\/a>.<\/p>\n This article is republished from The Conversation<\/a> under a Creative Commons license. Read the original article<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"By Ruipeng Liu & Sagarika Mishra* Imagine a company that sells you equipment, invests money in your business,…\n","protected":false},"author":2,"featured_media":630180,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[365,363,364,111,139,69,145],"class_list":["post-630179","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-new-zealand","tag-newzealand","tag-nz","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/630179","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=630179"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/630179\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/630180"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=630179"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=630179"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=630179"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"Firmus](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/10\/file-20261012-50-2d66a6.jpg\")
<\/p>\n