AI is real, the NVIDIA bubble isn't: The dragon has already awakened

No one doubts that Artificial Intelligence is the most radical technological change since the birth of the Internet. It's a real, powerful, and transformative wave. But there's a huge difference between a technological revolution and a rational stock market valuation. Today, looking at the market capitalization of companies like NVIDIA, I couldn't help but feel a sense of déjà vu from 1999. The market is pricing in a future where these companies maintain an eternal monopoly and infinite margins.

And that's a dangerous fantasy.

The bullish thesis on Wall Street is based on one premise: "No one can catch up to NVIDIA. Their hardware is unbeatable." But if we look to the east, across the Pacific, we'll see that this competitive advantage isn't technological, but legislative. The only reason NVIDIA is still reigning unopposed is the artificial wall of sanctions that the US government has built. But as history teaches us, walls don't stop innovation; they only divert it and often accelerate it.

The Chinese "Manhattan Project" effect

In 2022, when Washington banned the sale of H100 and A100 chips to China, the intention was to strangle the development of AI in the Asian giant. The result was exactly the opposite: it triggered a "Manhattan Project" for semiconductors. By closing the door to NVIDIA, they forced China to build its own house. And they've built it fast.

The technical data is conclusive and disproves the narrative that China is "years behind":

The fragility of the American giant

NVIDIA is the king today, no doubt. But its crown is held up by trade blockages, not by an insurmountable technical superiority in the long term.

Analysts celebrate that NVIDIA sells "cut-down" chips (like the H20) to China, but they ignore that NVIDIA's market share in that country has gone from 95% to around 50% in 2025. That other 50% hasn't evaporated; it's been captured by Huawei, Alibaba, and Cambricon.

We're seeing the birth of a parallel ecosystem. While American companies depend on vulnerable global supply chains, China is achieving self-sufficiency across the entire stack: from design (Biren, MetaX) to manufacturing (SMIC) and cloud deployment (Alibaba Cloud, Baidu).

The unsustainable bubble

This is where the bubble comes in. Current valuations of AI hardware companies assume they'll keep selling shovels at gold prices forever. They don't account for the scenario – already visible – where AMD (which is also coming on strong) and Chinese manufacturers flood the market with "good enough" options at a fraction of the cost.

If the only salvation for American companies is the White House's blockages, then they don't have a solid business; they have a political protectorate. And protectorates don't last forever.

The Chinese AI market has already proven it can live without NVIDIA. What will happen when those Chinese chips, currently confined to their local market out of necessity, start looking at emerging markets in Asia, Africa, or Latin America?

AI isn't a bubble, but the belief that a single American company will own global intelligence is. Investors should look less at stock charts and more at the spec sheets coming out of Shenzhen and Shanghai. The monopoly is breaking, and the noise from the bubble bursting could be deafening.