SAN FRANCISCO: The artificial intelligence investment frenzy continues with staggering sums despite uncertain returns on these enormous commitments.
Nvidia recently announced a $100 billion investment to help OpenAI build data centers as part of the ongoing AI infrastructure boom.
Global AI-related spending is projected to reach approximately $1.5 trillion by 2025 and over $2 trillion in 2026, representing nearly 2% of global GDP.
Investment fund Cathay Innovation head Denis Barrier confirmed investor confidence in AI as a breakthrough technology comparable to harnessing electricity.
Silicon Valley’s approach prioritises seizing opportunities over risk concerns according to industry observers.
Geopolitical tensions further fuel investment in massive data centers requiring expensive chips and enormous electrical power.
Private AI investment in the United States reached $470 billion between 2013 and 2024, with nearly a quarter occurring in the last year alone.
China followed with $119 billion in AI investment during the same period according to Stanford University research.
OpenAI raised approximately $40 billion in March 2025, boosting its estimated valuation to around $300 billion according to analyst assessments.
The company now stands as the world’s most valuable firm after surpassing SpaceX with a $500 billion valuation in an employee share sale deal.
OpenAI oversees the Stargate project which has secured $400 billion of a planned $500 billion investment for Texas data centers by 2029.
This White House-backed consortium includes Softbank, Oracle, Microsoft and Nvidia as key participants.
Nvidia completed over 50 venture capital deals in 2024 according to PitchBook data, practicing what some call circular funding.
Bernstein Research analyst Stacy Rasgon noted the OpenAI deal will likely fuel existing concerns about bubble-fueling behavior.
OpenAI generated approximately $4.3 billion in revenue during the first six months of 2025 according to The Information.
Unlike established tech giants with substantial cash reserves, OpenAI and competitors must creatively bridge funding gaps.
AI optimists believe revenue explosion is inevitable for ChatGPT, which serves 700 million people globally.
Global data center investments could cost up to $500 billion annually through 2030 according to Bain & Company analysis.
The consulting firm estimates the AI industry faces an $800 billion deficit even under optimistic assumptions.
OpenAI plans to spend over $100 billion by 2029, indicating profitability remains distant.
AI’s global computing footprint could reach 200 gigawatts by 2030, matching Brazil’s annual electricity consumption.
Wedbush Securities analyst Dan Ives compares the current AI sector to 1996 during the internet boom rather than 1999 before that bubble burst.
A Silicon Valley investor acknowledged many dollars will disappear and numerous companies will fail, similar to the internet bubble experience. – AFP
