Shares of chipmaker Nvidia (NVDA) fell sharply on Tuesday, closing down 4.4% at $178.07. The decline came amid broad market jitters fueled by political headlines and, more critically, growing investor skepticism about the sustainability of the artificial intelligence (AI) boom.
The sell-off was part of a wider market retreat, with the S&P 500 dropping 2% and the Dow Jones Industrial Average falling 1.8% as risk-off sentiment drove money toward haven assets like gold. The technology sector bore the brunt of the selling.
For Nvidia, the core issue is whether the frenzy around AI can persist. In a research note titled “the honeymoon is over,” Deutsche Bank analysts Adrian Cox and Stefan Abrudan argued that this year could be make-or-break for AI model developers without large existing businesses to fund massive costs.
“OpenAI is particularly extended and may be most at risk as it seems not yet to have found a workable business model to cover its reported cash burn of $9bn last year and likely $17bn this year,” the analysts wrote. OpenAI CFO Sarah Friar stated on Sunday that the company’s annualized revenue surpassed $20 billion in 2025, and the firm recently announced plans to introduce ads to some versions of ChatGPT. However, its path to sustained profitability remains in question.
Nvidia and OpenAI’s fates are deeply intertwined. According to an October report by The Wall Street Journal, Nvidia has agreed to invest up to $100 billion in OpenAI, which in turn has agreed to lease up to five million Nvidia chips in a deal valued at $350 billion. The Deutsche Bank analysts added, “OpenAI has committed to spending $1.4 trillion on data centers and related infrastructure in the next few years. The pressure will only increase as it gets nearer to an IPO, mooted for early 2027.”
The current tech investing landscape is drawing uncomfortable comparisons to the 1999 dot-com bubble. While debate continues, strategists at Goldman Sachs warn that the market’s AI frenzy risks mirroring the early-2000s crash.
In a client note, Dominic Wilson, a senior advisor, and Vickie Chang, a macro research strategist, stated that while markets are not yet in their “1999 moment,” the risks of the AI boom resembling that era are growing. They highlighted five historical warning signs:
Wilson and Chang noted these signals appeared at least two years before the dot-com bubble burst. They believe the AI trade still has room to run, but imbalances are building.
As Nvidia’s slide leads a tech sector recalibration, the market is forced to weigh the colossal costs of the AI revolution against its still-unproven returns. The combination of massive spending, uncertain business models, and echoes of past bubbles is forming a pressing question behind the AI euphoria.
