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Nvidia Reaches $2 Trillion as Apollo’s Marc Rowan Calls AI a “Bubble” Worse Than the Dotcom Era

Credits: Fortune

When Nvidia’s market cap surpassed $2 trillion on Friday, tech enthusiast Dan Ives of Wedbush Securities was optimistic about the future of artificial intelligence stocks.

However, billionaire Marc Rowan, the head of investment firm Apollo Global Management, took a more cautious stance, warning that valuations in the market have exceeded the excesses seen during the dotcom era.

According to Rowan’s wealth manager, the top 10 companies in the S&P 500 are currently more overvalued than the top 10 companies were during the mid-1990s tech bubble.

Torsten Sløk, a partner and chief economist at Rowan’s firm, raised concerns about the market’s valuation, suggesting that the current situation may not be as stable as it appears.

Apollo’s Marc, Rowan (Credits: Fortune)

He believes there is a greater than 50% chance that the Federal Reserve could surprise the market by either cutting rates in a panic or being forced to hike them.

While Ives is focused on marketing tech stocks to clients, Sløk’s firm is investing capital and must be cautious about market hype.

Sløk’s warning comes after Nvidia experienced a historic increase in market cap, gaining $277 billion in a single day, surpassing even Meta’s record set earlier in the month.

Nvidia’s success is largely attributed to the demand for its data center chips, which power advanced generative AI like Sora, a breakthrough from Open AI that can create photorealistic videos from text prompts. The demand for Nvidia’s AI inference training chips, such as the H100 Tensor Core GPU, has been overwhelming.

This has led to CEO Jensen Huang having to carefully manage the distribution of chips, with companies like Microsoft and Tesla looking to get involved in the AI chip market.

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