There's a classic scene in Breaking Bad where Walter White's entire operation hinges on a single variable outside his control. One wrong move, and everything collapses. The guy built an empire, but the foundation was sand.
Welcome to the American stock market in 2025.
Nvidia is about to report its quarterly earnings, and Wall Street is curled up in the fetal position waiting. Suit-wearing analysts, MBA-toting fund managers from Ivy League schools, and your brother-in-law who "knows how the market works" all have their fingers on the trigger. It's no exaggeration to say that the results of a single semiconductor company have the power to move entire indexes. The S&P 500. The Nasdaq. The mood of the entire financial world for weeks.
For anyone who doesn't know what Nvidia does: it makes GPUs — souped-up graphics chips — that power artificial intelligence models. ChatGPT, Gemini, Claude, the massive data centers run by Microsoft, Amazon, and Google. They all run on Nvidia silicon. The company has become the power plant of the AI gold rush.
And that's exactly the problem.
When a company becomes a religion
The market has stopped pricing Nvidia as a business. It's started pricing it as an act of faith.
Taleb would say the system has built an enormous fragility here. When you concentrate this much optimism, this much capital, this much narrative into a single point of failure — you're not investing. You're gambling. And gambling with the kind of emotional leverage no spreadsheet can measure.
Nvidia trades at multiples that would give Graham a heart attack. Price-to-earnings above 30 times projected profits in a sector that could be disrupted tomorrow by a Chinese competitor, by U.S. government regulation, or simply because the big tech companies decided to build their own chips — which, by the way, they're already doing.
Google has the TPU. Amazon has Trainium. Apple has its own silicon. Nvidia's dominance isn't permanent. It's convenient. For now.
The "too big to ignore" problem
When a single stock represents such a disproportionate slice of the indexes, index funds are forced to buy. Not because they believe in it. Because the mandate requires it. This creates artificial buying pressure that pushes the price up, which increases its weight in the index, which forces more buying. A feedback loop that works beautifully on the way up.
And on the way down?
Kovner, one of the greatest traders in history, had a simple rule: never confuse price movement with value. Price is what the market is screaming right now. Value is what the business is actually worth over time. When those two numbers drift too far apart, someone ends up holding the tab.
The question isn't if. It's who will be left holding the bag when the music stops.
What the earnings will reveal — and what they won't
If Nvidia beats expectations — and the expectations are absurdly high — the market will celebrate like it just cured cancer. Headlines will scream about "AI taking over the world." Instagram gurus will flood your feed with screenshots of green portfolios.
If it disappoints even slightly — even if the profits are massive in absolute terms — brace yourself for the hiccup. Billions evaporating in minutes. Cascading selloffs. And the same analysts who were "extremely bullish" will show up on TV explaining why they "always knew" there was risk.
That's the circus. Predictable script. Same recurring cast. Paying audience.
The question nobody wants to answer
How much of your portfolio is directly or indirectly dependent on Jensen Huang's mood during an earnings call?
If you hold a Nasdaq ETF, you hold Nvidia. If you hold the S&P 500, you hold Nvidia. If you hold any fund that "invests in technology and the digital future," you hold Nvidia. You might not even know it, but you're on the boat.
That doesn't mean the company is bad. Nvidia is an extraordinary business. Huang built something genuinely impressive. But an extraordinary business and an extraordinarily stretched price are two different things. And the market, in this moment of collective AI euphoria, is treating them like synonyms.
Buffett spent decades repeating that the greatest risk isn't in a bad asset — it's in a good asset bought at the wrong price.
The circus will go on. The clown show will go on. But you need to decide whether you're in the audience or whether you're the clown.
And if you don't know the answer, you're probably the second one.
