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NVIDIA has surpassed Apple to become the world's second-most valuable company

NVIDIA has surpassed Apple to become the world's second-most valuable company. The chipmaker's market value soared past $3 trillion, riding on the AI wave. While there is no denying that AI will reshape the global economic landscape, the question remains: are we getting ahead of ourselves?

The fact that NVIDIA's valuation continues to soar, seemingly unfazed by rising interest rates, should be a red flag. It suggests that investors are pricing in a distant, AI-dominated future, where NVIDIA reigns supreme. However, those future cash flows are now relatively more expensive in what is a higher interest rate environment, and there are countless unknowns when attempting to predict so far ahead.

During the dot-com bubble, the world was convinced that the Internet would revolutionise everything. While e-commerce has indeed become a significant part of our global economy, the path to this point was far from straightforward. The emergence of smartphones and social media, for example, were game-changers that few saw coming back then. The dot-com bubble burst because we were making predictions based on an incomplete understanding of the new world order that we were entering. The danger is that we might be do the same with AI.

Source: Eeagli

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