NVDA Chip Obsolescence & AI Bubble Concerns: 2025 Industry Analysis

The event stems from a 2025-11-22 Reddit discussion on NVDA chip obsolescence as an AI bubble sign [0]. Key concerns: AI firms use 6-year GPU depreciation cycles (vs. historical 3-4 years) to inflate earnings [1], leading to unsustainable yearly capital expenses instead of 5-year investments [2]. NVDA’s 92% market share in generative AI GPUs is driven by ecosystem investments like its 7% CoreWeave stake and $100B OpenAI commitment [4,6]. However, 2025 AI data center spending ($400B) outpaces revenue ($20-40B), creating financial strain [2]. Counterarguments highlight chip reuse for non-frontier inference workloads [5].

1. Extended depreciation masks obsolescence: Hyperscalers’ 6-year schedules ignore actual chip useful life (3-7 years) [1,2].
2. Ecosystem lock-in: NVDA’s customer investments ensure recurring demand but increase bubble exposure [4].
3. Workload diversification mitigates risk: Chip repurposing for inference reduces replacement costs [5].

• Risks
  : Bubble burst from unsustainable costs (yearly GPU spending, free adoption), write-downs from unaddressed obsolescence [2,3].
• Opportunities
  : NVDA’s $3-4T 2030 AI infrastructure forecast [3], chip reuse for non-frontier workloads [5].
• Urgency
  : Short-term scrutiny of depreciation policies and revenue projections is advised [0,2].

• NVDA market cap: $4.36T, P/E ratio:43.87x [0].
• 2025 AI data center spending: $400B, annual depreciation: $40B [2].
• NVDA market share:92% in generative AI GPUs [6].
• Technology sector performance (2025-11-22): +0.146% [0].