AI summary
Summary of article:
If Huida gets into trouble, it may not trigger a financial tsunami like a bank failure, but its core position in AI circular financing could spread trouble into the supply chain.
Huida (NVIDIA CEOJen-Hsun Huang After being involved in the espionage scandal, another extramarital affair came to light. The latest news is that Huida’s board of directors is preparing to fire CEO Huang Jen-hsun. A series of upheavals raise a worrying question: Is Huida “too big to fail”? Will the crisis spread through the “AI circular financing” capital chain established by Huida to support the AI boom?
CNBC website’s analysis is that if something goes wrong with Huida, it will not cause a crisis similar to the 2008 financial tsunami, but it could affect the entire AI because of its key role in the huge “AI circular financing”.supply chain .
In recent years, Huida has made hundreds of billions of dollars of financial commitments to other companies to aid the development of the entire AI industry, earning it the title of “AI Central Bank”. The Federal Reserve (Fed) and other financial institutions are closely monitoring whether emergencies in the AI industry could arise that could shake the global financial system.
As early as July this year, Fed officials discussed that if there were problems in the AI industry, there could be a “massive asset revaluation” in the market.
Nevertheless, analysts and current and former financial executives believe that a repeat of the 2007–08 financial crisis is unlikely. Sheila Bair, who was once a U.S. The Federal Deposit Insurance Corporation (FDIC), said that Huida was “not at all a company that is too big to fail in the sense of a bank.”
Unlike troubled banks, Huida is not at risk of collapse due to a sudden loss of market confidence. Even when problems arise, Huida can continue to produce products that customers want to buy, and its large shareholder equity provides a cushion.
However, Bell said regulators should still pay close attention to the risks Huida and other similar companies pose to banks and the overall financial system. “If Huida falls, it will be a very shocking and major event.”
Huida’s share price has fallen 27% from its Oct. 6 high as of Wednesday’s close, and fell another 8% in after-hours trading on Wednesday.
Still, those who closely track the capital flows behind the AI industry say that even if Huida’s share price falls more sharply, it is unlikely to cause the kind of systemic financial problems that regulators are protecting against.
However, the risks brought by the AI industry still keep some financial executives up at night, mainly worried that many of the factors supporting the AI boom may reverse at the same time.
For example, if the value of Hyuda’s GPU chips declines, investors may begin to question whether companies that borrowed money to buy chips will be able to repay their debt.
In this case, the financial support that big technology companies originally provided to the rest of the industry may suddenly change from promoting growth to declining. Technology companies may face the double blow of debt problems and falling stock prices at the same time, which will affect the overall economy.
