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Is AI a Bubble? | Gavin Baker on Data Centers, GPUs, and the AI Economy
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Round-Tripping and NVIDIA's Competitive Logic
At 10:11 · chapter starts 7:30
The conversation turns to round-tripping — the practice, echoing internet-era accounting games, where NVIDIA invests in companies like OpenAI that then use those funds to buy NVIDIA chips. Baker is blunt: it's objectively happening, but at a very small scale and for rational strategic reasons [1] — Gavin Baker "Round-tripping — where a chip company invests in a customer who then buys chips — is objectively happening but at a small scale. Baker argu…" 07:47 . The real driver isn't financing need — it's competitive dynamics. NVIDIA's most dangerous rival isn't AMD, Broadcom, or Intel; it's Google, which owns both the TPU chip and the DeepMind research lab and is arguably the leading AI company today, having taken 15–20 points of traffic share in just 2–3 months through Gemini. Anthropic, meanwhile, is effectively captive to Google TPUs and Amazon Trainium. That leaves OpenAI and xAI as the independent labs, and if Google is subsidizing its AI ecosystem, NVIDIA must respond in kind. Baker relays Jensen Huang's view that these investments are expected to be good investments — a rational strategic bet, not bubble-era excess.
Round-tripping — where a chip company invests in a customer who then buys chips — is objectively happening but at a small scale. Baker argues it's driven by competitive dynamics: NVIDIA's existential rival is Google's TPU, and investing in OpenAI or xAI is a rational strategic response, not a sign of bubble financing.
Google's Gemini has taken 15–20 points of web traffic share in just 2–3 months, suggesting Google may already be the largest AI product by traffic.
