https://medium.com/@hrnews1/the-value-of-nvidia-now-exceeds-an-unprecedented-16-of-u-s-gdp-ede4b541b24c Sixteen percent of GDP. Think about that number.
The United States has tethered 16% of its entire economic output to the fortunes of a single company. Not an industry. Not a sector. One company. NVIDIA.
This isn’t diversification. It’s not even speculation. It’s national self-delusion dressed up as innovation.
America has done this before. We worshiped General Motors until it collapsed. We inflated the dot-com bubble until it burst. We built an entire financial system on subprime mortgages until 2008 taught us otherwise. We learned nothing…. NVIDIA’s Unchecked Dominance
NVIDIA makes graphics processing units. They’re very good at it. Their chips power AI models, crypto mining operations, and cloud datacenters. The company’s market capitalization has surged to over $5 trillion.
Wall Street cheers. Politicians brag about American technological superiority. NVIDIA’s CEO becomes a rockstar.
But here’s the truth: concentrated market dominance is not strength. It’s fragility masquerading as power.
NVIDIA controls between 80% and 95% of the market for AI chips used for training and deploying models. Their H100 and A100 processors are the gold standard for training large language models. Every major tech company — Microsoft, Google, Amazon, Meta — depends on their hardware.
This isn’t resilience. It’s a single point of failure with a stock ticker.
Revenue concentration tells the story. NVIDIA’s datacenter segment accounts for over 88% of total revenue. Remove AI hype from the equation and you’re looking at a company propped up by speculative frenzy, not diversified industrial strength. The Dangerous Over-Leverage of the U.S. Economy
Sixteen percent of GDP.
Let me say it differently: If NVIDIA stumbles, America doesn’t just lose a tech darling. It loses jobs, investments, pension funds, and the entire AI narrative Wall Street has been selling.
The ripple effects would be catastrophic. Tech slowdown. Financial contagion. Investor panic. The kind of systemic shock that makes 2008 look like a practice run.
And what’s America’s backup plan? There isn’t one.
We’ve bet the economy on corporate hubris rather than building diversified industrial capacity. We’ve confused market capitalization with national security. We’ve treated stock prices as a measure of geopolitical strength. It’s reckless. It’s stupid. And it’s quintessentially American.
No other advanced economy would tolerate this level of concentration. Germany doesn’t pin 16% of its GDP on Siemens. Japan doesn’t hinge its future on Toyota. Even China, for all its centralized planning, spreads risk across multiple state champions.
But America? We put all our chips on one chipmaker and call it genius. Supply Chain Fragility and Geopolitical Shortsightedness
NVIDIA doesn’t manufacture its own chips. Taiwan Semiconductor Manufacturing Company does. TSMC produces an estimated 90% of the world’s super-advanced semiconductor chips, and more than 90% of the most advanced chips globally are manufactured in Taiwan.
Taiwan. An island 100 miles from mainland China. A territory Beijing considers its own. The most geopolitically volatile piece of real estate on the planet.
This is where America has decided to anchor its technological future.
TSMC’s most advanced facilities are in Hsinchu and Tainan. If China moves on Taiwan — through blockade, invasion, or economic coercion — those fabs go offline. NVIDIA’s supply chain evaporates. America’s AI ambitions collapse overnight.
And China knows this.
Beijing is pouring resources into semiconductor self-sufficiency. SMIC, Huawei, and other Chinese firms are reverse-engineering NVIDIA’s architecture, with Huawei’s Kirin 9000S processor — produced in SMIC factories — providing tangible proof that China can produce advanced chips locally despite embargoes.
Analysts project China will achieve a true 5nm-based chip by 2025 or 2026. SMIC is approximately a handful of years behind TSMC in process technology.
Five years. That’s the gap between American dominance and Chinese parity.
Export controls won’t save us. Sanctions won’t stop reverse engineering. The U.S. can restrict NVIDIA from selling advanced chips to China, but it can’t prevent Chinese engineers from studying, replicating, and eventually surpassing American designs.
History is littered with technological monopolies that thought they were untouchable. Britain dominated textiles until America stole the designs. America led in consumer electronics until Japan refined the process. Japan ruled semiconductors until Korea and Taiwan built better fabs.
Overconfidence breeds catastrophe. Always has. Always will. Market Myopia and Investor Complacency
NVIDIA’s price-to-earnings ratio has fluctuated wildly, hitting levels that would make even dot-com speculators blush. At its peak, the company traded at over 70 times earnings.
This isn’t valuation. It’s religion.
Investors assume AI demand is infinite. They believe NVIDIA’s dominance is permanent. They think American tech exceptionalism is a law of nature rather than a temporary advantage.
They’re wrong.
China’s chip industry is advancing faster than Western analysts predicted. Reports indicate Chinese companies are achieving 5nm chip production using deep ultraviolet lithography without access to extreme ultraviolet equipment.
The gap is closing. And when it closes, NVIDIA’s moat disappears.
American investors are complacent. They see NVIDIA’s stock price and assume supremacy. They ignore competitive threats until it’s too late. They confuse market hype with sustainable advantage.
It’s the same myopia that convinced investors pets.com was worth billions. The same delusion that made Enron look invincible. The same arrogance that inflated every bubble in American financial history.
Where is America’s industrial policy? Where’s the strategic planning? Where’s the diversification?
Nowhere.
Washington reacts to crises. It doesn’t prevent them. The CHIPS Act allocated $52 billion for semiconductor manufacturing — a pittance compared to the scale of the problem. It’s a band-aid on a hemorrhage.
Meanwhile, China created the China Integrated Circuit Investment Industry Fund to channel an estimated $150 billion in state funding to support domestic industry. South Korea and Taiwan have invested hundreds of billions more.
America is being outspent, outplanned, and outmaneuvered. And yet, policymakers still assume tech dominance is our birthright.
Anti-trust enforcement is toothless. Strategic planning is non-existent. Industrial diversification is treated as anti-market heresy.
The result? America has a “too-big-to-fail” tech company that nobody wants to regulate, nobody wants to challenge, and everybody assumes will last forever.
We’ve been here before. AT&T. IBM. Microsoft. All seemed invincible until they weren’t.
The difference now? NVIDIA isn’t just a monopoly. It’s a systemic risk. And nobody in Washington seems to care.
There is no way a graphic card company could account for that high of a percentage. This is definitely not going to end well.
totally not a bubble though.
But what LLM wrote this?
When once in a century depressions become normal and not being in one is the once in a century event.
I’m not going to spend time on how dumb it is to compare a speculative total valuation to the real economic output of a single year.
If we zoom out, it’s not that surprising that emerging tech is going to require greater and greater computing power. We thought that our desire for our laptops to be faster was driving this, Moore’s Law, whatever. But now there’s a new technology that seems to raise the requirements by an order of magnitude. In the short term, this is fantastic news for the makers of computer chips. We’re living in the late Information Age. Is it all that surprising that there would be moments like this where our ability to consume computing power outstrips our ability to produce it? So Nvidia has a high valuation. BFD. Investors are confident in its future. That doesn’t make it 16% of the US economy.
I want to make a clarification here before we all get too far ahead with “16% of GDP”. There are many things wrong with the way giant tech companies dominate their respective fields. However the value of a company does not equal its’ share of the GDP. GDP is the OUTPUT of a country in 1 year. It does not equal the value of all the private enterprises combined which is what this comparison is trying to do. What we want to compare then, is to take NVIDIA’s output in ONE YEAR and see how much of the economy it dominates. US GDP is ~ 30 trillion in 2025. Nvidia’s output or revenue for current fiscal year is ~ $200 billion. That’s 0.6% of the GDP. That’s far cry from 16%, by about 27 times less.
What we should be concerned are the size of the market cap of these giant tech companies dominating the total value of the stock market, as well as the monopolistic margins these companies enjoy. All of these contribute to the imbalances in the world we see today - in the economies, in the society and social structure, and in politics. Communism once rose two centuries ago in protest against the concentration of power in the hands of a few. A solution is needed to remedy the imbalances of today.
Yes, thank you. A lot of people live in a house that’s worth more than they make in a year. We can write a breathless sentence that makes this sound shocking if we like.
“Think about that number. You have tethered 450% of your economic output to the fortunes of one structure!”
Evaluation, not value.
Evaluation is the act of putting a value on something
This pedantry is not helpful and does nothing to defray the problem
“Putting a value on something” vs. “Something having a discernable value” is the point.
Nvidia doesn’t make GPUs. TSMC does.
Nvida just sends them their design specs.
Apple, Google, Nvidia, etc. - all TSMC in Taiwan. A country that China would love to occupy given a good motivator.
Boy, when that AI bubble pops it’s gonna pop like a nuclear explosion.
JPow says this bubble is different though
Great write up but just to conclude:
This is not an “if it will break” but “how fast it will break” issue, because this WILL happen, it’s only a matter of when, and event that won’t be far off anymore now that current LLMs have shown to be a technological dead end.
I mean they aren’t a technological dead end just as they aren’t a technological panacea.
You can absolutely use them as coding assistants. They can be used to fool people, sometimes quite effectively. There is definitely “something” going on under the hood even if we don’t want to use words traditionally applied to the human experience like"learning" or “intelligence”. There is a surprising amount of consilience in current models, where you train to get good at task A, but also get good at task B, for no obvious reason.
It’s clear to me no amount of paper mache smearing over the half-glass of wine issue fixes it. There is something fundamental to the “gappiness” present in llms both knowledge set and appearance of logic. It’s becoming clear this is something intrinsic to the architecture and gluing in hot fixes isn’t going to change that. There is some very real underlying weirdness (sea horse emoji). Context windows still only create the mirage of global states (and maybe with a large enough window this doesn’t matter (relative to a human perspective). It’s also clear that nothing about llms or transformers overcomes basic principles of entropy or information theory: you can’t just model noise like some kind of infinite training cheat code.
From where we were (lstm’s) to where we are, they are easily a 100x improvement. ML now is MUCH better than ML 10 years ago, and it has everything to do with transformers.
When llms came into the scene, attention and transformers were not new. but it was a new approach to training them, and creating some clever things to get them to generalize, along with making them utterly massive. But “Attention is all you need” had been published quite a while before this generation, and I promise, if Google has seen the potential, they would not have released that research.
There will be stepwise and generational improvements to AI and ML. even though transformers are what broke through to the mainstream, the progress is much more linear and continuous than it might at first appear. So we shouldn’t expect transformers to be the end state, nor should we expect the next major jump to come from them, or even necessarily something novel. it may be the tools for the next big jump are already here, just waiting to be applied in a clever way
When do you hit tulip level?
Concentration in fewer and fewer stocks is what happens towards the end of a bull market, and we’re currently in a bull market that has been running wild for years. My personal opinion is that we’re going to get parabolic price increases with a blow-off top, with the following collapse coinciding with the collapse of the U.S. dollar and destruction of the U.S. as the dominant economic force in the world. The stage has been set with a shrinking economy resulting from a massive ill-conceived trade war and indiscriminate deportation of our low-cost labor force, along with gross fiscal irresponsibility from unnecessary tax cuts and excessive spending giving rise to unsustainable budget deficits. The final nail in the coffin will be the debasement of the dollar by a corrupted Federal Reserve that has lost its independence from the Executive branch. There is a reason that gold, a hard asset viewed as a safety net, is in it’s biggest bull run in history, and that bull has a lot further to run. Things will likely come to a head in the 4th quarter of 2026, or not too long thereafter, and we will then slide into that I’m calling “The Greatest Depression”. May you live in interesting times!
The latest stock run is largely already just the debasement on the dollar, in my opinion.
This is the exact type of thing you see near the peak of a bubble.
cant wait for China to take over 🤲
I just want cheaper graphics cards so I can play my nintendo games.
