Street Analysis

U.S. stock market has built a perfect house of cards with four pillars – that is of OpenAI (private), Nvidia (NVDA), Tesla (TSLA) & Oracle (ORCL)

Why or rather how?

• Open AI unveiled the ChatGPT product in November of 2022 which unleashed all the frenzy
• Nvidia built the chips to enable or bring the OpenAI product to life and scaled the production and resultant revenue which is out-of-this world
• In a meantime, Tesla sold the hype of robotaxi and robots (humanoids) with a spectacular success
• Final leg now, Oracle is feasting on the build-outs of cloud infrastructure / data centers for the hungry

Current valuations are as follows: OpenAI at $500 billion (private) as of August 2025, Nvidia at $4.3 trillion, Tesla at $1.5 trillion and Oracle flirting with $1.0 trillion magic number

Enough of circular arrangements and customer contract announcements in recent days to pump up or at least sustain the elevated stock prices, the kind of arrangements you can only expect to see in a Banana Republic not once-great nation called United States of America. A little more details are captured below…

• Early this month, OpenAI signed the contract with Oracle to purchase $300 billion in computing power over next 5 years. In a plain language, customer – OpenAI, in a ‘good faith’ signs a contract with the supplier – Oracle
• Two days ago, Nvidia made an announcement to invest $100 billion in OpenAI. Once again, in a plain language, customer – OpenAI, in a ‘good faith’ sign up for the investment from its supplier – this time Nvidia, not Oracle
• Does this remind anyone of a good ole’ saying that I scratch your back and you scratch mine?

This is all while much is unknown or to be determined as to whether OpenAI remains a non-profit entity or how to structure the for-profit arm within the non-profit organization! Hmm! Head-scratcher, right?

Nvidia’s growth rate is trending down materially or rather coming back down to earth now already as shared in the graphic in an earlier post – from giddying heights of several hundred percent to less than 50%, which is more human-like than super-natural being one, which Nvidia did enjoy for the time-being! If the business is so strong, why does Nvidia need to invest in its customer, especially such a large amount?

The ilks of the Big Techs and majority of the Magnificent Seven can be “forgiven” for the time being as majority of them have numbers (including profits) that are even though stretched, they can still someday “grow” into that valuation for the very patient investor…be it after a year, 3, 5, 7 or 10 years! Much as what happened after the dot-com bust!

Institutional mad money rush continues…on the backs of who? It is the retail investors… as they will be the ones left holding the bag once all the dust settles after having this come crashing down at some point, which is a question of ‘when’, not ‘if’ as discussed at a greater length in earlier post. Market crash, unfortunately, is impending and almost inevitable now, which was in our complete control till recent years and even avoidable.

A rare event known as “Tail Risk” or “Black Swan” event now seems to be just around the corner and plain in sight whereas earlier it can never be predicted, even by the brightest of the bright investors by its very definition of tail risk. Writing is on the wall already now.

Once one pillar starts crumbling or is taken out when the rubber meets the road, it will not take much to start affecting others due to this gigantic interconnectedness, monumental hypes and unrealistically high expectations. We will be waiting patiently! A smart investor certainly can heed this caution and ask a famous question “show me the money” for this “pie-in-the-sky” valuations…

Ray Dalio of Bridgewater Associates just warned that the “very, very dark times” are ahead of us! It sends a chill to our spine and it does not appear that he is that far off.

A bonus bonanza is a state capitalism with increased state intervention in the private enterprises, the topic that we have not even touched upon yet and it continues to increase by the day…