Rebel Capitalist News Here's The Dark Secret That Could CRUSH AI Stocks
20 snips
Sep 24, 2025 The discussion dives into the questionable financial practices of AI companies, raising alarm over potential accounting gimmicks. There’s a critical look at NVIDIA's massive deal with OpenAI and whether it inflates stock valuations through circular revenue. The government’s unusual involvement in tech partnerships is scrutinized, alongside concerns about AI's long-term profitability. Additionally, the dangers of collusion between corporations and government are explored, suggesting it could stifle competition and innovation.
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Round-Tripping Can Inflate Market Value
- Nvidia's $100B investment in OpenAI could functionally circulate money back as GPU purchases and inflate reported revenue.
- That circular flow can boost Nvidia's market cap far beyond any real economic gain.
Valuation Multiples Mask Economic Substance
- Booking the same cash as both revenue and investment can multiply valuations and enrich insiders without new product value.
- Public companies can therefore sell equity at inflated marks and funnel proceeds through the circular deals.
Question AI's Long-Term Profitability
- Question valuation drivers when a technology looks like a commodity with weak network effects.
- Expect price competition and pressure on margins even as AI adoption grows.
