AI is real, the NVIDIA bubble isn't: The dragon has already awakened Transcript of the narrated version (5 min). Narrated with a synthetic voice (Larry). The writing is Esteban Rey's — kilowatto.com. --- 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 market valuation. Today, looking at the market capitalization of companies like NVIDIA, I couldn't help but feel a déjà vu of 1999. The market is pricing 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 still reigns unopposed is the artificial wall of sanctions that the US government has built. But as history teaches us, walls don't stop innovation, they just 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 overwhelming and disproves the narrative that China is "years behind". Huawei is back with their new Ascend 910C chip, slated for mass production in 2025, which is no longer a toy. It achieves performance comparable to NVIDIA's H100 thanks to an ingenious chiplet and massive cluster architecture. Huawei has already demonstrated Atlas clusters capable of training gigantic models, and giants like iFlytek and Baidu are already migrating. Companies like MetaX, founded by former AMD engineers, have launched the C600 GPU, with 144 GB of HBM3e memory, a figure that rivals and even surpasses NVIDIA's H200 in memory capacity. What's most alarming for Silicon Valley is that they claim it's 100% domestically produced. The end of CUDA dependence is also underway. NVIDIA's great "moat" was always its CUDA software. But necessity is the mother of invention. China has created a massive alliance where Huawei, with its CANN, Cambricon, with its NeuWare, and Moore Threads, with its MUSA, are building a unified ecosystem. MetaX has even made its chips compatible with CUDA, allowing developers to migrate their code almost painlessly. 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, where while American companies depend on vulnerable global supply chains, China is achieving self-sufficiency across the entire stack, from design, which includes companies like Biren and MetaX, to manufacturing, which includes SMIC, and cloud deployment, which includes Alibaba Cloud and Baidu. The unsustainable bubble. Current valuations of AI hardware companies assume they will keep selling their products at high prices forever, without considering the scenario where AMD and Chinese manufacturers flood the market with alternatives that are good enough, but at a fraction of the cost. If the only way American companies can survive is through blockages imposed by the White House, then they do not have a solid business, they have a political protectorate, which is not sustainable in the long term. The Chinese AI market has already demonstrated that it can function without NVIDIA. A significant change is expected when Chinese chips, currently limited to their local market, start expanding into emerging markets in Asia, Africa, or Latin America. AI itself is not a bubble, but the idea that a single American company will dominate global intelligence is. Investors should focus less on stock charts and more on the specifications of products coming out of Shenzhen and Shanghai, as the monopoly is breaking, and the consequences of the bubble bursting could be severe.