Nvidia’s "Triple Transformation" and the Global Race for Artificial General Intelligence

It feels like the chase for AI supremacy is one of the main reasons why there is so much uncertainty and chaos in the economy right now.  Just yesterday, a day after Nvidia announced another blowout quarterly earnings by any financial metric, the markets had its most volatile day in over seven months with almost a 900 point drop in just over two hours. 

The fears of an AI bubble continue to roil the markets. And it looks to do so for the forseeable future as even blowout earnings from the leading AI chip manufacturer couldn't calm things any.  And the growth in S&P 500 valuations are heavily driven more and more by AI technology.  In fact the top eight companies in terms of valutions are:

• Nvidia
• Apple
• Microsoft
• Alphabet
• Amazon
• Broadcom
• Meta
• Tesla

This means the whole economy is being driven by a handful of companies (and contries), focused in a subcategory of a main category, whose main goal is to win the AI "arms race" at any expense... or so it seems.

During the recent "Taking the Top off AI with Dr. Michael Wu" segment of our CRM Playaz Show, Dr Wu sees this AI arms race has the economy acting like it did during WWII and the race for the atomic bomb.  It was a really interesting analogy which had us really digging in on this. 

"If the Germans invented the atomic bomb first, we're gonna have all those negative side effects of [the] atomic bomb plus... a Nazi government. [...] Let's win the race first, and then we can actually deal with the side effects." — Dr. Wu

Now is it a pretty stark example to compare AI and the atomic bomb when it comes to the impact they have on economies and geopolitics...and even humanity?  Maybe. But it absolutely makes for an interesting conversation that raises a bunch of questions that cross a significant spectrum of concerns.

Below is a clip from the conversation, with an edited transcript and a Gemini summary of it for your review.

Edited Transcript

Brent Leary: I was checking out the Nvidia call yesterday. Jensen noted that it's the first time since the dawn of Moore's Law that three such transformations were happening at once. One was the transition to accelerated computing. Second one is the transition to generative AI. And the third one is the transition to agentic and physical AI.

Dr. Wu: I think what he described is real. There's no doubt about it. It is actually partly kind of why people think this is a bubble. Because these frontier models, they're going so fast, they almost kind of ignore the rest of the world. I think there's a reason for that. And the reason is because there's an AI arms race between countries and also between companies as well. Everybody's trying to get to AGI. So that arms race basically trumps everything. If other industries can leverage this for their benefit, great. But if they can't, that's not my goal. Win the AI race first.

Take a look at it from, you know, geopolitically... I don't know, atomic bomb. The idea is that if we have to win the race to get the atomic bomb first... there are a lot of negative side effects, radiation... It's just like, but if the Germans, right, invent the atomic bomb first, we're gonna have all those negative side effects of the atomic bomb plus maybe a Nazi government. The negative side effect, it's either gonna be [that] plus us, right—democracy—or the negative side effect plus a Nazi government.

When you have an AI arms race, right... negative side effects, negative side effects... Let's win the race first and then we can actually deal with the side effects. Whether the industry can follow or not or benefit from it, right, it's secondary. It's secondary. If they can benefit, great. [If] they cannot, we deal with that later. Let's get to [AGI].

I would say the economy almost doesn't make sense. Because it's not a typical kind of free market economy; [it's a] wartime economy right now. In wartime [it] just doesn't make sense. It's not a free economy. You would just dump a lot of money in there just...

Brent Leary:  Is there a bubble at the end of that?

Paul Greenberg: In World War II, the New Deal actually created jobs a lot after the war ended. And then... you know, all the decentralized control, it was actually a boom. It was actually a boom because all those jobs were being created and the economy had been geared up that way. It kept going. The bubbles were considerably later.

Brent Leary: But there was also... Russia.. them getting the bomb and us having the bomb, the Cold War broke out. Mutual destruction.

Paul Greenberg: More mutual—yeah.

Dr. Wu: Destruction. 

Brent Leary: But there's more than one or two actors here.We were talking about countries, superpowers. Now we're talking about individual companies, maybe working with the government—

Dr. Wu: Mm-hmm.

Brent Leary: —But with that same premise in mind. So how do you think this all turns out?

Dr. Wu: Hypothetically, this hasn't happened, right? I mean, one good outcome is like, okay, let's just say we win the AI arms race, right? Against China, or you know, probably they're the only contender now. Basically we could just say, "Okay, let's just agree to sign some kind of AI regulation." I don't know what that would be. I mean... we all know that we need some kind of regulation for AI; this cannot go unchecked. It's also very hard to kind of have, you know, a world kind of agency that regulates or governs this. Why would another country agree to to—well—

Paul Greenberg: Historically that never works. We've got League of Nations, United Nations, The Hague court. Nobody pays attention to them.

Brent Leary: Only if the superpowers give it... but it—yeah.

Paul Greenberg:  Depends on the superpowers literally sending armed force because reason doesn't govern geopolitics all that much.

Dr. Wu: That said, to your point, let's just say the US won the AI war. It's not even explicit necessarily; it's a threat that they could screw up your economy or they could do this... there's a lot of things. I mean, if you win the AI arms race, you get the AGI first, you could just say, "Either do this or like... collapse your regime." That's what China [is] most afraid of. "I'll just break your firewall, create a firewall in China and just infuse it with all free information so that everybody could... [collapse] your regime."

If there's any kind of good that could come out of this arms race... or someone, if this, right... then we can actually create some kind of a treaty or some kind of agreement among the world to kind of... for whatever. I think that's whatever we think is actually good, right, for a safe and AI development in the future. For not just us, but for everybody, for our children, our future generations as well.

But if we don't have... if we don't win that first, then we're gonna have all the negative side effects of AGI plus a totalitarian government.

Paul Greenberg: If AGI becomes real, then they—AGI wins.

Key Themes & Insights

1. The "Triple Transformation" of Computing Brent Leary opens by citing Nvidia CEO Jensen Huang, who recently noted that for the first time, three major technological shifts are happening simultaneously:

• The transition to Accelerated Computing.

• The transition to Generative AI.

• The transition to Agentic and Physical AI.

2. The "Atomic Bomb" Analogy

Dr. Wu uses a stark analogy to explain why the race to AGI is moving so fast, regardless of potential "bubbles" or safety concerns.

• The Premise: Just as with the atomic bomb in WWII, the priority is getting the technology before an adversary does.

• The Calculation:

o Scenario A (US Wins): The world deals with the negative side effects of AI (analogous to radiation) but retains Democracy.

o Scenario B (Adversary Wins): The world suffers the negative side effects of AI plus a totalitarian global order (referenced as a "Nazi government" in the WWII analogy).

• Conclusion: We must win the race first, then deal with the side effects and regulations later.

3. A "Wartime" Economy

Paul and Dr. Wu discuss why the current economy feels disjointed and defies traditional free-market logic.

• Capital Dumping: Massive amounts of capital are being poured into AI infrastructure not for immediate profit, but for strategic dominance.

• Historical Context: Paul notes that during WWII and the New Deal, the "centralized control" and massive spending actually created jobs and a subsequent economic boom. The current AI spending spree is viewed as a "wartime economy" where strategic victory takes precedence over market efficiency.

4. Geopolitics:

US vs. China The conversation identifies China as the only true contender against the US in this race.

• The Threat: Dr. Wu suggests that if the US achieves AGI first, it holds a trump card. For example, the US could theoretically use AGI to break China's internet firewall, flooding the country with free information and potentially collapsing the regime—a scenario China fears deeply. • Ineffectiveness of Treaties: Dr. Wu argues that international bodies (UN, Hague) cannot regulate this race. Regulation and treaties will only be enforceable after a superpower wins the race and dictates the terms.