NVDA Chip Obsolescence Debate & AI Sector Sustainability Implications

The event stems from a Reddit discussion [6] on November22,2025, focusing on NVDA chip obsolescence and AI sector implications. Key concerns: AI cost underreporting via extended depreciation, unsustainable yearly capex, AI bubble risks [6]. NVDA’s stock:7.81% drop Nov20,1.30% Nov21 [0]; tech sector gained 0.146% Nov22 (lagged others) [0].
NVDA’s exposure: data center revenue 88.3% of FY2025 total [0]. Core debate: chip depreciation (2-6 year schedules [1,2]). Michael Burry argues for2-year obsolescence [3]; CoreWeave CEO claims older chips retain95% value for non-frontier workloads [1]. NVDA cites $500B Blackwell/Rubin revenue visibility [4].

1. Cross-Domain Impact: Obsolescence concerns link NVDA revenue to AI firms’ cost structures—extended depreciation may mask profitability issues [6].
2. Valuation Sensitivity: NVDA’s43.87x P/E (above industry avg ~20x) [0] amplifies risk if demand weakens.
3. Dual Narrative: Bull (older chips’ utility [1], NVDA revenue visibility [4]) vs bear (obsolescence risks [3], high P/E [0]) views shape sentiment.

:

• Valuation Risk: High P/E leaves limited room for demand disappointments [0].
• Demand Sustainability: Faster obsolescence could trigger $1T+ AI infrastructure write-downs [1].
• Regulatory Scrutiny: Potential investigation of AI depreciation practices [5].
  
  Opportunities
  :
• NVDA’s $500B Blackwell/Rubin revenue visibility [4].
• Older chips’ utility for non-frontier workloads [1].

NVDA’s volatility reflects obsolescence concerns; data center revenue dominance (88.3%) [0] and high P/E (43.87x) [0] increase sensitivity. Depreciation debate (2-6 years [1,2]) impacts AI profitability and NVDA demand. Analyst consensus target: $250 (+39.8% upside) [0], but3 sell ratings highlight分歧 [0].