What’s News in Earnings: Should Markets Worry About an AI Bubble?

Summary

WSJ What’s News: "Should Markets Worry About an AI Bubble?"

Date: November 21, 2025
Host: Asa Fitch
Guest: Robbie Whelan (WSJ chips reporter)
Special Audio: Lisa Su (CEO, AMD); Jensen Huang (CEO, Nvidia)

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Episode Overview

This episode breaks down the most recent earnings season with a focus on the semiconductor industry, particularly companies at the heart of the artificial intelligence (AI) boom like Nvidia and AMD. Host Asa Fitch and chips reporter Robbie Whelan examine whether the current investment explosion around AI could be forming a bubble, what’s driving extraordinary demand for AI chips, and why markets remain volatile despite record financial results. The discussion also explores the relationship between chipmakers, manufacturers, and their big tech customers—especially given concerns around profitability, business models, and the sustainability of AI investments.

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Key Discussion Points & Insights

1. Insatiable Demand for AI Chips

• The AI boom has established semiconductors as the "picks and shovels" of the era; companies like Nvidia are seeing enormous demand.
• Quote:

  "There's a real belief that AI compute really equates to intelligence. So if you have the chance... to put on more compute, you're going to do it because it's going to give you incremental advantage."
  – Lisa Su (CEO, AMD) [01:30]

2. Record-Setting Earnings Amid Volatility

• Nvidia’s latest earnings "pleased a lot of investors and helped settle markets," even though its stocks and those of similar AI companies have experienced significant volatility.
• The market is driven by record demand, though fears of overspending and a potential bubble persist.
• Insight:

  "All signs seem to be pointing towards what really can only be described as record demand."
  – Robbie Whelan [01:59]

3. AI Market Jitters: Why the Volatility?

• Drop in AI-related stock prices is partly due to:
  • The relatively limited number of major buyers (mostly large, resource-rich tech companies).
  • Opaque deal structures involving "circularity"—where chipmakers invest in their own customers, creating unclear revenue origins.
• Quote:

  "We have this word that’s become a buzzword... circularity. Companies like Nvidia have been gravitating towards deals where essentially... money out the door comes back to them... So when the market sees this... where is the revenue going to come from and more importantly, when is it going to come?"
  – Robbie Whelan [02:47]

4. The Role of Manufacturers and Foundries

• Nvidia and AMD design chips, but the actual manufacturing is done by contract foundries—mainly TSMC. This segment is also thriving.
• Intel, an exception with its own foundry business, is seeing some resurgence largely because of government investment.
• Quote:

  "Nvidia earlier this year passed this milestone where they became the world's first $4 trillion company. And a few months later they became the world's first $5 trillion company."
  – Robbie Whelan [04:05]

5. The Weak Link: AI Product Buyers

• The customers—the big tech giants (Microsoft, Google, OpenAI, Anthropic)—are buying vast quantities of AI chips, but their products are not yet generating substantial revenue.
• Insight:

  "All the products they're designing... are, generally speaking, not making much money, if any, at this point... we’re still a long way off from... meaningful repeating income."
  – Robbie Whelan [05:43]

6. Bubble Dynamics: Size of Outlays vs. Revenue

• Example cited: Nvidia posts $57 billion in quarterly revenue, while OpenAI is losing $50 billion a year, yet is among Nvidia's principal customers.
• Reflection:

  "We're in this mode where it's spend, spend, spend, but we don't have the money coming in the door from the sales or subscriptions to AI products..."
  – Robbie Whelan [05:43]

7. Is There an AI Bubble? Industry Perspectives

• Jensen Huang (Nvidia CEO) downplayed bubble fears, saying their business looks fundamentally strong from the inside.
• Quote:

  "From our vantage point, we see something very different."
  – Jensen Huang [07:13]

8. Future Signals: How Will We Know If It's a Bubble?

• Watch the "middlemen"—companies that rent or resell compute (like CoreWeave, which recently lost 40% of its market value).
• The sector is hypersensitive to minor disruptions, a classic symptom of speculative fervor.
• Quote:

  "When you have... the littlest disruption to that business model can cause just like huge amounts of disjunction. So that's the kind of thing I'm watching, this heightened volatility."
  – Robbie Whelan [07:32]

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Notable Quotes & Memorable Moments

• Lisa Su (AMD CEO, on demand for AI compute):

  "There's a real belief that AI compute really equates to intelligence. So... it's really, I would say, an insatiable demand for AI compute." [01:30]

• Robbie Whelan (on circularity and transparency):

  "Why do we have to do the deals these ways that are somewhat worrisome structures of the deals, but also where is the revenue going to come from and more importantly, when is it going to come?" [02:47]

• Jensen Huang (Nvidia CEO, on bubble fears):

  "From our vantage point, we see something very different." [07:13]

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Important Segment Timestamps

• 00:18–01:11 – Introductions and AI chip sector context
• 01:30–01:54 – Lisa Su (AMD) on insatiable AI compute demand
• 01:59–02:23 – Robbie Whelan on record-breaking chip demand
• 02:47–03:57 – Market volatility and 'circularity' financial deals
• 04:05–05:39 – Overview of chip manufacturing, TSMC, Intel’s challenges
• 05:43–06:36 – Tech giants as customers, profitability issues
• 06:36–07:10 – Revenue/spending mismatch; Nvidia vs OpenAI finances
• 07:13 – Jensen Huang (Nvidia) addresses AI bubble speculation
• 07:32–08:08 – What to watch for as AI bubble signals (middlemen, volatility)

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Summary Flow and Tone

The episode offers an incisive, cautious but nuanced look at the current AI investment boom. Despite spectacular sales and valuations in chip companies like Nvidia, structural worries—such as unclear end market profitability and speculative deal structures— are causing volatility and keeping bubble debates alive. The tone is analytical and slightly skeptical but not alarmist: all voices emphasize the real long-term value in AI tech while acknowledging the market’s feverish, sometimes unsteady progress.

This recap should equip anyone who missed the episode with a clear understanding of the key trends, market dynamics, and future signals to watch in the AI and semiconductor sectors.

Transcript

[Comcast Business Announcer]

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[Asa Fitch]

Hey listeners, I'm Asa Fitch for the Wall Street Journal, and this is what's News in earnings, our look at some of the biggest themes standing out this earnings season. Today, we're talking about chips. Now, semiconductors are the computational picks and shovels, if you will, of the AI boom, and big tech companies and AI developers are buying as many of them as they can. Now, Nvidia is the leading AI chip company by far. It reported quarterly results on Wednesday that pleased a lot of investors and helped settle markets. Nvidia's stock fell again yesterday, with which perhaps speaks to the volatility we've seen in the AI trade lately. Here to help me dig into this is Wall Street Journal chips reporter Robbie Whelan. Hi, Robbie, and thanks for being here.

[Robbie Whelan]

Hi, Issa.

[Asa Fitch]

So we've seen some pretty interesting earnings recently from chip suppliers like Nvidia, which reported results on Wednesday. We've seen strong results in forecasts recently. Also from Advanced Micro Devices, which makes AI chips. Here's what AMD CEO Lisa Su said on the company's earnings call earlier this month.

[Lisa Su]

There's a real belief that AI compute really equates to intelligence. So if you have the chance, if you have the balance sheet, if you have the capability to put on more compute, you're going to do it because it's going to give you incremental advantage versus your competition. So it's really, I would say, an insatiable demand for AI computer.

[Asa Fitch]

So what do these earnings say about the state of AI and the business of AI broadly?

[Robbie Whelan]

What they say is that a lot of the fears that we're hearing about a bubble and about too much money being spent on AI infrastructure with no real plan for how to recoup that money. A lot of those concerns have been proven by this latest round of earnings to be more in the mid to long term. All signs seem to be pointing towards what really can only be described as record demand.

[Asa Fitch]

Now, of course, not everything has been great recently with the AI trade in the markets. A business of AI is one thing, the markets are another. Nvidia shares were down about 10% between late October and Wednesday when it announced its results. A bunch of other AI linked companies have fallen in recent weeks, too. Why has that been happening? Is it easy to ascribe a rationale behind all those falls in stock prices.

[Robbie Whelan]

One thing is that the number of people who actually buy these chips, there's just a limited market for who has the financial firepower and technical know how to pay companies like Nvidia and AMD for their chips and for the computing power that they provide. Another thing is that the financing of a lot of the deals in the AI world right now is not very transparent. We have this word that's become a buzzword recently called circularity. What that means is that companies like AMD and Nvidia. Nvidia have been gravitating towards these deals where essentially what they're doing is investing in their customers, giving their customers funds that could be used. We don't know if they are being used, but could be used to buy their own products. So it's sort of like money out the door that comes back to them in the form of big orders for products. And so when the market sees this, they think, well, first of all, why do we have to do the deals these ways that are somewhat worrisome structures of the deals, but also where is the revenue going to come from and more importantly, when is it going to come? And so that's why we've had this real climate of uncertainty and volatility in the market surrounding AI recently.

[Asa Fitch]

So let's take a step back and just talk about the manufacturing of AI chips. What are the earnings we've seen recently telling us about that part of it?

[Robbie Whelan]

Well, the biggest companies in the space, Nvidia and amd, don't even manufacture their own chips. They just come up with these blueprints, designs for architecture chips and then they send them to contract manufacturers, the most notable of which is called Taiwan Semiconductor Manufacturing. Tsmc, what we've been seeing recently is that pretty much every company from that side of the business is really prospering. They're really thriving. Nvidia earlier this year passed this milestone where they became the world's first $4 trillion company. And a few months later they became the world's first $5 trillion company. The next step of the process is the manufacturing. I mentioned TSMC intel is a really interesting and anomalous case because intel is one of the few companies that has both a large scale chip and a large scale foundry business. Their foundry business is not doing well in part because they've missed out on several generations of manufacturing technology, seeded that market to other players, most notably tsmc. But if we're looking to intel, we are also actually seeing a company that is growing and thriving for the first time in years when it comes to the market perspective. And that's partly because the government took a 10% stake in the company earlier this year. And so they're working very hard to get their foundry business back on its feet. And it's unclear if that will happen or how soon it will happen, but they're another example of a company in the middle of the AI chip supply chain that is making moves that are being rewarded by the markets for focusing on what customers really want, which is AI chips.

[Asa Fitch]

What about the companies that are on the other end of this transaction buying.

[Robbie Whelan]

These chips, the customers that we're talking about? So the Microsofts, The Googles, the OpenAI's of the world, anthropic, all these new companies and old established big tech companies, they're the weak link in this process. And the reason for that is because all the products they're designing. Gemini, Claude OpenAI are, generally speaking, not making much money, if any, at this point. We're still a long way off from the world where OpenAI is taking those hundreds of millions of users they have and turning that into sort of meaningful repeating income. And that's one of the main things that kind of worries the markets, because we're in this mode where it's spend, spend, spend, but we don't have the money coming in the door from the sales or subscriptions to AI products that we need in order to make that spending make sense.

[Asa Fitch]

Isn't this kind of concerning? I mean, look at the numbers, and they're pretty stark, right? Nvidia just reported its latest quarter. It made $57 billion of revenue. That's a lot of money. On the other side of that transaction, one of the biggest customers in vidi chips is OpenAI, which it's losing about $50 billion a year, and they're the ones paying for these chips. And you have, interestingly seen Jensen Huang begin talking a little bit about an AI bubble. In an earnings call on Wednesday, he addressed some of the bubble fears. Let's hear what he said.

[Robbie Whelan]

There's been a lot of talk about an AI bubble.

[Jensen Huang]

From our vantage point, we see something very different.

[Asa Fitch]

So Jensen Huang is talking about an AI bubble that he thinks is not really a bubble, but what would you be looking for as an indication going forward that, okay, we're in a bubble, or maybe not?

[Robbie Whelan]

Well, one thing that I am particularly interested in is there's a whole ecosystem of middlemen in the AI world. There's one in particular that I have my eye on. Called Core Weave, which lost about 40% of its market value in the last last month or so. Investors are so willing and ready to throw money at companies, any company that's in AI at all. And then when you have like the littlest disruption to that business model can cause just like huge amounts of disjunction. So that's the kind of thing I'm watching this heightened volatility. How do investors react to seemingly small disruptions to various businesses?

[Asa Fitch]

Those are all great points. Thanks for joining us here.

[Robbie Whelan]

Thanks, Asa.

[Asa Fitch]

And that was what's News in Earnings. Today's show was produced by Zoe Kulkin and Anthony Bansi with Deputy editor Chris Zinsley. Additional sound courtesy of S and P Global Market Intelligence. Later today, we'll have the PM edition of what's News out for you as usual. Until then, I'm Mason Fitch. Have a great day.

[Jensen Huang]

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