Bubble or Boom? Inside the Fight Over AI’s Data Center Bet

Bubble or Boom? Inside the Fight Over AI's Data Center Bet

In China, the AI stock trade has already unwound. The tech-heavy STAR 50 index fell about 40% from its midyear peak by late October, erasing roughly $480 billion in market value by Reuters’ count, and the broader CSI300 index lost 8.5% in October, its worst month in more than a decade. In the same weeks, four of the biggest U.S. tech companies told investors they plan to spend roughly $720 billion to $740 billion this year, most of it on data centers and the chips inside them.

Those two pictures sum up the argument now running through markets. One side sees a spending boom that has outrun the revenue needed to pay for it. The other sees demand so strong that the real problem is building fast enough. This piece lays out both, along with three stories from the past two weeks that have fed the debate: a tech chief’s comment about the memory in your PC, AI hardware sitting in warehouses waiting for electricity, and a new generation of chips arriving before the last one is switched on.

The RAM Fight

Memory: Who Gets the Scarce Chips?
The RAM Fight
What Sam Altman said, and the shortage behind it
“You want maximum utilization in the cloud”
Sam Altman, OpenAI CEO, Cheeky Pint podcast, episode released Oct 29, 2026, answering a question about running AI models on personal computers
5%
Altman’s PC Figure
Share of the time he said DRAM in personal computers is in use
“Extreme”
Memory Pricing
Nvidia CFO on memory prices in August; headed higher into next year
71-72%
Nvidia Q4 Margin
Where Nvidia expects gross margin to bottom this quarter
2027
HBM Shortage
IEA expects high-bandwidth memory to stay short through at least end-2027
~3/4
Microsoft Spending
Share of Sept.-quarter capex on short-lived assets such as CPUs and GPUs, with higher memory costs
Oct 29
Episode Released
Cheeky Pint, hosted by Stripe co-founder John Collison
Sources: Tom’s Hardware (Oct 30, 2026); Nvidia Q2 fiscal 2027 earnings call transcript (Aug 26, 2026); International Energy Agency (April 16, 2026); Analytics India Magazine (Oct 29, 2026). Dashed outline = company guidance or agency projection.

On an October 29 episode of the Cheeky Pint podcast, hosted by Stripe co-founder John Collison, OpenAI chief executive Sam Altman was asked about local inference, meaning people running AI models on their own computers instead of in the cloud. He argued that it is “quite terrible” for the world’s limited supply of DRAM, the main working memory in computers, to sit in personal machines where it is “being used 5% of the time.” His point was utilization. In a supply-constrained market, he said, “you want maximum utilization in the cloud,” where the same memory can serve many users back to back.

The clip spread fast, and much of the reaction was hostile. Critics pointed out that AI data centers are a big reason memory is scarce and expensive to begin with. Notebookcheck noted that memory makers are prioritizing data center demand, adding to price pressure on PCs and other hardware, and that Altman’s position lines up with OpenAI’s business of running its models in the cloud. Altman did not say people shouldn’t own computers, but the remark touched a nerve with buyers already paying more.

The shortage behind it is not in dispute. Nvidia finance chief Colette Kress told analysts in August that the company was experiencing “extreme pricing conditions in memory,” driven in large part by the AI build-out itself, with prices headed higher into next year. Nvidia expects its gross margin to bottom at 71% to 72% in the fourth quarter. The International Energy Agency expects a shortage of high-bandwidth memory, the specialized kind used in AI chips, to last through at least the end of 2027.

Chips With Nowhere to Plug In

Bought, Delivered, Waiting for Power
Chips With Nowhere to Plug In
Dark GPUs: chips that have been purchased but can’t be switched on or fully used
~$5B
Amazon GB300 Racks
Expected under its Early Rack Receipt process before final deployment, per August emails (Business Insider)
~$3B / mo
More to Come
Additional racks per month, per the same emails
“Best practice”
Amazon’s Response
Staging hardware near sites is routine, a spokesperson said
32 GW
U.S. Power Shortfall
Morgan Stanley’s net estimate through 2028, or 34%, per Reuters
2-3 years
Land, Power, Shell
How far out customers secure sites, Nvidia’s Jensen Huang said in August
$45.2B
Microsoft, Sept. Quarter
Below its own forecast of more than $50B after third-party capacity was delayed
Sources: Business Insider via Investing.com (Oct 20, 2026); Business Standard citing Reuters and Morgan Stanley (Oct 30, 2026); Nvidia Q2 fiscal 2027 earnings call transcript (Aug 26, 2026); Analytics India Magazine (Oct 29, 2026). The number of racks in storage and how long they have waited have not been disclosed.

The RAM fight is about who gets scarce hardware. The next story is about hardware that has been bought and can’t yet be used. Business Insider reported on October 20 that Amazon set up an “Early Rack Receipt” process, citing internal emails from August, under which it expected to take delivery of about $5 billion of Nvidia GB300 server racks before final deployment, with roughly $3 billion more each month. Some Amazon Web Services sites had room for the racks but not the electricity to run them, so finished equipment was staged in warehouses. The industry has a name for this: dark GPUs, chips that have been purchased but can’t be switched on or fully used.

Amazon pushed back. A spokesperson called staging hardware near deployment sites a routine “best business practice” and disputed the suggestion that it lacked a clear path to bring the equipment online. How many racks are waiting, and for how long, has not been disclosed.

Amazon isn’t alone. Microsoft spent $45.2 billion on capital projects in the September quarter, below its own forecast of more than $50 billion, because capacity that third parties were supposed to deliver was delayed. A year ago, Microsoft chief executive Satya Nadella described the same problem in plainer terms: “a bunch of chips sitting in inventory that I can’t plug in.”

Power is the bottleneck. Morgan Stanley estimated that U.S. data center developers face a net power shortfall of 34%, or 32 gigawatts, through 2028, Reuters reported on October 5. Nvidia chief executive Jensen Huang told analysts in August that customers first have to secure “the land, power, and shell, which oftentimes is a couple, two, three years out.”

Both camps read the same facts their own way. Skeptics see billions of dollars tied up in equipment that earns nothing until it is plugged in. Optimists see proof that the constraint is electricity, not customers. Huang said on the same call that Nvidia’s demand is “much greater” than the roughly 70% growth its supply allows next fiscal year.

Old Before They’re Switched On?

Older Nvidia Chips: Rental Price Change Since Start of 2026
Old Before They’re Switched On?
Silicon Data rental-price tracking, as reported Aug 17, 2026
Nvidia H100 Launched 2022 +38% Nvidia A100 Launched 2020 +20%
Aug 2026
Vera Rubin Ships
Nvidia began production shipments; about 20% of fiscal Q3 data center revenue expected
35x
Nvidia’s Claim
Lower token cost for Rubin vs. Grace Blackwell Ultra (GB300), per Nvidia’s CFO; not an independent test
2029
A100 Contracts
Some CoreWeave A100 contracts run this long, its CEO said
2-3 yrs
Burry: Product Cycle
Versus the 5-6 years big cloud companies spread server costs over
$176B
Burry’s Estimate
Understated depreciation across the industry, 2026-2028
6 → 5
Amazon, Some Servers
Useful life cut in 2025, citing the pace of AI technology; Meta moved most servers to 5.5
Sources: Analytics India Magazine (Aug 17, 2026), citing Silicon Data and CoreWeave; Nvidia Q2 fiscal 2027 earnings call transcript (Aug 26, 2026); The Motley Fool (Nov 22, 2025) and Tiger Newspress (Nov 12, 2025) on Michael Burry and Amazon. Dashed outline = estimate.

Waiting has a cost because the next chip is already here. Nvidia began production shipments of its Vera Rubin platform in August and expects it to make up about 20% of its data center revenue in its fiscal third quarter. Kress claimed Rubin delivers 35 times lower token cost than Grace Blackwell Ultra, the GB300 generation sitting in Amazon’s warehouses. A token is a small unit of AI output, so that is Nvidia’s measure of how cheaply each generation produces answers. It is the company’s own figure, not an independent test.

That feeds the sharpest bear argument. Investor Michael Burry, known from “The Big Short,” argued last November that the big cloud companies spread the cost of their servers over five to six years while Nvidia’s product cycle runs two to three, and that this will understate their depreciation by about $176 billion between 2026 and 2028. Depreciation is the yearly charge a company books to spread out what equipment cost. The companies don’t all agree with each other, either. Amazon cut the assumed life of some servers from six years to five in 2025, citing the faster pace of AI technology, while Meta extended most of its servers to five and a half years.

The bull side’s evidence is that old chips keep earning. Rental prices tracked by Silicon Data rose about 38% for Nvidia’s H100, launched in 2022, and about 20% for the A100, launched in 2020, since the start of 2026. CoreWeave’s chief executive said some of its A100 contracts run through 2029.

The two sides are partly talking past each other. A chip can stay useful for years and still lose most of its resale value early. Being outdated is not the same as being obsolete. The debate is over how fast the value falls, and whether it falls before the investment pays back.

What a Pop Looks Like: China’s October

China’s AI Stock Unwind vs. U.S. Spending Plans
What a Pop Looks Like: China’s October
Index moves through late October 2026
STAR 50 From midyear peak ~−40% CSI300 Last 12 weeks −15% CSI300 October −8.5%
~$480B
STAR 50 Value Lost
Market value erased from the midyear peak, by Reuters’ calculation
100B+ yuan
Beijing Support
Liquidity sought by 31 firms through central bank swap operations (about $15B)
$720-740B
U.S. 2026 Plans
Combined capital spending guidance of Amazon, Alphabet, Microsoft and Meta
Sources: Reuters via Business Recorder (Oct 31, 2026); Business Insider via AOL (Nov 3, 2026). U.S. range is an AktieGo calculation from company guidance (AP, 24/7 Wall St., Analytics India Magazine, Meta Form 8-K). Dashed outline = guidance.

China offers the closest real-world look at the bear case playing out. The CSI300 lost 15% over 12 weeks, its longest losing streak on record, and Hong Kong’s tech majors ended October near their lowest level in two years. Reuters tied the October slide to a U.S. tech sell-off that reignited concerns about the returns on heavy AI spending. Business Insider listed waning optimism about U.S. AI spending, disappointment with the pace of China’s own tech progress, a prolonged property downturn and weak consumer spending.

Beijing has stepped in. Thirty-one securities firms and fund managers applied for more than 100 billion yuan, about $15 billion, in liquidity support through central bank swap operations, alongside cheaper financing for share buybacks. Analysts at 22V Research said the measures look aimed at putting “a floor under markets” rather than starting a broad rally.

Skeptics see the template for what could happen elsewhere once doubts about AI returns set in. Others note that China’s slide had China-specific causes, and argue the market may now be too pessimistic. UBS’s head of China internet research, Kenneth Fong, said some stocks are being priced as if the current spending peak were a permanent drag on earnings, with little value given to a recovery in cash flow or to AI paying off.

Two Readings of the Same Numbers

Bubble or Boom?
Two Readings of the Same Numbers
▼
The Bubble Case
The revenue gap
Gartner: $8.5T needed through 2030 to cover spending and a 12% return; no more than $3.6T of AI revenue expected
Write-down risk
Gartner puts $3.5T+ of AI infrastructure spending at risk of impairment by the end of 2030
Cash strain
Free cash flow negative at Alphabet (−$9.1B) and Meta (−$2.12B) last quarter; Amazon −$42.4B over 12 months
Classic capital cycle
Bank of America, via Fortune, says such cycles usually end in disappointment
▲
The Boom Case
Demand above supply
Nvidia expects supply to stay a bottleneck at least through the end of fiscal 2028
Revenue is showing up
Google Cloud +103% and AWS +39% in the September quarter
Old chips still earn
H100 and A100 rental prices rose this year; some A100 contracts run to 2029
Losses, not a bubble
IoT Analytics: not a bubble today; expects write-downs the largest companies can absorb
Neither case is a forecast or a recommendation. Sources: Gartner (Oct 14, 2026); Fortune (Oct 17, 2026); company filings and earnings calls; Business Standard; Analytics India Magazine; IoT Analytics (Oct 6, 2026).

Nobody can say with certainty whether this is a bubble. What the evidence supports is two competing readings, each backed by credible sources.

The Bubble Case

The bear case starts with arithmetic. Gartner estimates that AI data center owners would need about $8.5 trillion in cumulative revenue through 2030 to cover announced spending, financing costs and a 12% return, against no more than $3.6 trillion of AI revenue it attributes to those data centers. It puts more than $3.5 trillion of AI infrastructure spending at risk of write-downs by the end of 2030, and warns most providers won’t recover their investment before the current generation of chips is replaced.

Bank of America describes the boom as a classic capital cycle that usually ends in disappointment, according to Fortune. The cash strain is visible. Alphabet’s free cash flow was negative $9.1 billion in the September quarter and Meta’s was negative $2.12 billion, while Amazon’s was negative $42.4 billion over the past 12 months. Add Burry’s depreciation argument and the warehoused racks, and skeptics see spending that has run ahead of returns.

The Boom Case

The bull case starts with demand. Nvidia says its supply will remain a bottleneck at least through the end of its fiscal year 2028, and that demand is running above what it can ship. Google Cloud revenue rose 103% and Amazon Web Services 39% in the September quarter. Dan Greenhaus of Solus Alternative Asset Management told Fortune that past AI warnings were followed by new market highs, and CoreWeave chief executive Mike Intrator said the company’s deal backlog is enough to cover its debt.

Even some analysts who expect losses don’t call it a bubble. IoT Analytics concluded in October that the AI market is not in a bubble today, though its own model shows returns on the data center build-out falling below a 15% hurdle from 2028. It expects write-downs the largest companies can absorb because they fund most of their spending from operating cash flow, with debt-funded cloud providers more exposed.

That last point is where the two cases meet. Few credible sources argue every dollar will earn its keep, and few argue the demand is imaginary. The disagreement is over how much gets written off, who absorbs it, and when.

Five Things to Watch

Forward Indicators, November 2026
Five Things to Watch
1
Nvidia’s results, November 17
Nvidia guided fiscal third-quarter revenue to $108 billion and expected Vera Rubin to make up about 20% of data center revenue. The report lands after the close.
2
AMD and Super Micro
Both are expected to report in early November, per earnings calendars. Their data center numbers are a second read on AI hardware demand.
3
2027 budgets
Alphabet expects capital spending to “increase significantly” in 2027 and will give details on its fourth-quarter call. Meta said it is still building its 2027 plans.
4
Memory prices
Nvidia said memory prices are headed higher into next year. Any easing would matter for PC buyers and data center budgets alike.
5
China support and chip rules
Whether Beijing’s liquidity support steadies the market, and how Nvidia’s reported requirement that cloud clients keep most business outside China plays out (Financial Times, via Bloomberg).
Sources: Nvidia Q2 fiscal 2027 earnings call transcript; Gotrade News (Nov 3, 2026) for the Nov 17 date; 24/7 Wall St. (Alphabet); Meta Form 8-K; Business Insider via AOL; Bloomberg (Nov 3, 2026). AMD and Super Micro dates are projected by earnings calendars, not confirmed. Not a recommendation.

FAQ

Is AI in a bubble?

Credible sources disagree. Gartner says AI data center owners need about $8.5 trillion in revenue through 2030 but will see no more than $3.6 trillion, while Nvidia and the big cloud companies report demand running ahead of supply. IoT Analytics expects losses but says the market is not in a bubble today. No one can settle it in advance.

Are AI chips really sitting unused?

Some are. Business Insider reported that Amazon is storing Nvidia racks in warehouses because some sites lack power, and Microsoft said delayed third-party capacity held back its spending. Amazon calls the staging routine. How many chips are waiting, and for how long, has not been disclosed.

Will those chips be obsolete before they’re plugged in?

Outdated, possibly. Obsolete, probably not. Nvidia’s newer Rubin chips are already shipping, and Nvidia claims they produce AI output far more cheaply. But older chips still earn money: rental prices for the 2020-era A100 and 2022-era H100 rose this year, and some A100 contracts run through 2029. The bigger question is how fast the chips lose value on paper.

Did Sam Altman say people shouldn’t own PCs?

No. He argued that memory sitting in personal computers is used only a small share of the time and does more work in a data center, in the context of people running AI models at home. Critics answered that AI demand is what made memory scarce, and that his view suits OpenAI’s cloud business.

Why did China’s AI stocks fall harder than U.S. ones?

The slide combined fading optimism about U.S. AI spending with problems specific to China: disappointment over the pace of domestic tech progress, a long property downturn and weak consumer spending. The STAR 50 fell about 40% from its midyear peak, and Beijing has stepped in with liquidity support.

Sources

Disclaimer

Sources: company regulatory filings and earnings-call transcripts, Gartner, the International Energy Agency, IoT Analytics, and wire and financial press as cited. The combined 2026 spending range is an AktieGo calculation from company guidance. Nvidia’s performance comparisons are company claims. Forecasts and estimates are revised over time. AktieGo doesn’t independently verify third-party data, so figures should be checked at the time you’re reading this.

These are speculative investments carrying significant risk including potential total loss of capital. Coverage on aktiego.com is provided for informational and educational purposes only. aktiego.com is not a registered investment advisor. Nothing in this article constitutes financial, investment, or professional advice. Readers are encouraged to conduct their own due diligence and consult a qualified financial advisor before making any investment decisions. For more information please see our full DISCLAIMER.

AktieGo

More Market Insights
on YouTube

Watch our latest market briefings, CEO interviews and stock deep dives covering the companies and sectors we follow.

Nvidia's $500 Billion AI Financing Bet
Nvidia’s $500 BILLION AI Financing Bet: Brilliant Move or Hidden Risk?
The Drone Revolution: Why Warfare Has Changed Forever
The Drone Revolution: Why Warfare Has Changed Forever
The AI CyberSecurity Arms Race Has Begun
The AI CyberSecurity Arms Race Has Begun
Market Briefings
3× per week
Stock Deep Dives
In-depth analysis
CEO Interviews
Exclusive insights
Emerging Sectors
Mining · Tech · Energy · Biotech
The AktieGo Brief

The market moves fast.
Our briefing keeps up.

Curated updates on stock picks, company spotlights, and in-depth market analysis across mining, biotech, energy, crypto, and tech — delivered straight to your inbox. Join thousands of investors who start their morning with the AktieGo Brief.

Name


BRIEF