The Nvidia (NASDAQ:NVDA) share price is up 66% over the last six months. However, bulky investment in customers means that sales growth may not be as mighty as it seems.

While some analysts hear echoes of the dotcom crash, I’m not convinced. I think this is a move that could prove brilliant in the long run.

Nvidia investments

A good example is OpenAI. Sam Altman’s company plans to build up to 10 gigawatts of AI infrastructure using Nvidia hardware over the next few years.

The problem is that the company isn’t making money (and doesn’t expect to do so anytime soon). Analysts are therefore wondering how it will repay this investment.

At the same time, Nvidia intends to invest $100 billion in OpenAI as part of a deal related to the implementation of data centers. And it has similar offers CoreWeave and other smaller companies.

Nvidia says it is investing cash into it NO used to finance own sales. But analysts who are starting to worry about the AI ​​bubble are starting to wonder if it’s oddly familiar…

Is this a problem?

During the Internet boom, AOL was the main Internet advertising company. However, as sales growth began to ponderous, the company began to resort to techniques called roundabout financing.

The company bought shares in smaller companies, which then used the money to buy advertising through AOL. As a result, the company’s revenues far exceeded basic economic reality.

We all know how this story ended. Analysts fear that something similar could happen with Nvidia and its investments in OpenAI and CoreWeave.

Therefore, Nvidia clearly indicates that it is investing money is not used to finance sales of its GPUs. I agree because I believe his investments may serve a more fundamental purpose than raising the stock price.

Long-term prospects

When it comes to AI chips, the competition is not like that Just about performance. The company’s software platform – CUDA – also makes it very challenging for a customer to switch to competitor chips.

In the past, I underestimated the importance of CUDA. But that’s why it may be in Nvidia’s long-term interest to find ways to attract customers to the game in the low term.

The prospect of long-term, recurring revenue means that investments today can pay off gigantic in the future. And that’s why I think Nvidia’s current approach makes a lot of sense.

If I’m right, investors can look back on Nvidia’s deals as a key moment when the company accelerated from its rivals. I think it’s definitely worth taking a look at this offer.

Do you have a bubble?

Nvidia is clearly working difficult to grow sales above organic levels. The question is whether this is something investors should worry about.

I think the answer is yes. If demand weakens, stocks could crash (and I mean that). crash) and this is a risk in the near future.

However, looking further into the future, I am much more positive. I believe AI as a whole has a lot of growth ahead of it and switching costs are high, so I think investors should continue to consider buying the stock.