Nvidia's Value Matches India's Market: AI Bubble Alert?

Published Date : 03/11/2025 

Kanwal Rekhi, a prominent Indian American entrepreneur and investor, warns of an AI bubble, questioning the sustainability of Nvidia's soaring market capitalization and the broader economic implications. 

Indian American entrepreneur and investor Kanwal Rekhi has sounded a sharp warning about the state of the global technology market, suggesting that the artificial intelligence boom may be on the verge of a reckoning.

In a Facebook post, Rekhi noted that Nvidia’s market capitalization is now roughly equal to the total market capitalization of all publicly traded companies in India — a comparison he said reveals a massive imbalance. “Either Nvidia is overvalued or Indian stocks [are] an attractive buy. Both can’t be true,” he wrote.

Calling it a full-on AI bubble, Rekhi pointed out that nearly 40 percent of all investments today are flowing into AI-related activities, yet the returns on these massive inflows are far from clear. “I am not able to see the commensurate return on these investments,” he said, citing Nvidia’s price-to-earnings ratio approaching 60 and describing investor expectations as “too high to be realistic.”

He also expressed concern over the broader macroeconomic environment, warning that “any hiccup in economic numbers is likely to cascade very rapidly” given what he described as the “unstable policies” of President Donald Trump.

Rekhi, a veteran of multiple market cycles, drew parallels between today’s exuberance around AI and past speculative manias. “I can never forget the crash of 1987. Excelan had gone public that year. I remember the dotcom crash all too well. Is an AI crash coming, soon?” he asked.

Rekhi’s perspective carries weight in the technology and venture capital ecosystem. A pioneer of Silicon Valley’s Indian diaspora network and co-founder of the Indus Entrepreneurs (TiE), Rekhi has backed dozens of startups over the past three decades. His remarks echo growing unease among seasoned investors who fear that the current AI frenzy — driven by Nvidia, OpenAI, and others — may not be sustainable without real, near-term returns to justify such valuations.

In recent weeks, several experts have warned of a potential AI bubble. Last month, the Bank of England cautioned that global markets face a growing risk of a “sudden correction,” amid soaring valuations of leading artificial intelligence companies. “The risk of a sharp market correction has increased,” the Bank’s financial policy committee (FPC) said. “On a number of measures, equity market valuations appear stretched, particularly for technology companies focused on artificial intelligence. This … leaves equity markets particularly exposed should expectations around the impact of AI become less optimistic.”

A report from Stanford University’s Human-Centered Artificial Intelligence (HAI) highlights the staggering pace of AI’s financial boom. The institute noted that corporate investment in artificial intelligence surged to $252.3 billion in 2024, with private funding up 44.5% and mergers and acquisitions rising 12.1% compared to the previous year. Over the past decade, HAI observed, “total investment [in AI] has grown more than thirteenfold since 2014,” underscoring both the scale — and the potential fragility — of the current AI gold rush.

While the AI market continues to grow at an unprecedented rate, Rekhi’s warnings serve as a cautionary note to investors and policymakers alike. As the technology sector braces for potential turbulence, the question remains: Is the AI bubble about to burst, or will it continue to defy expectations? 

Frequently Asked Questions (FAQS): 

Q: What is Kanwal Rekhi's main concern about the AI market?

A: Kanwal Rekhi is concerned that the current AI market, particularly the high valuation of companies like Nvidia, may be unsustainable and resembles past speculative bubbles.

Q: How does Rekhi compare Nvidia's market capitalization to India's entire market?

A: Rekhi notes that Nvidia’s market capitalization is roughly equal to the total market capitalization of all publicly traded companies in India, indicating a significant imbalance.

Q: What does Rekhi suggest about the returns on AI investments?

A: Rekhi points out that nearly 40 percent of investments are flowing into AI-related activities, but the returns on these investments are far from clear.

Q: What historical market crashes does Rekhi draw parallels to?

A: Rekhi draws parallels to the 1987 stock market crash and the dotcom crash, suggesting that a similar AI crash could be on the horizon.

Q: What is the Bank of England's warning about the AI market?

A: The Bank of England warns of a growing risk of a 'sudden correction' in global markets due to the high valuations of leading AI companies, making equity markets particularly vulnerable. 

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