Summarize this content to 2000 words in 6 paragraphs in Arabic Stay informed with free updatesSimply sign up to the Artificial intelligence myFT Digest — delivered directly to your inbox.Hedge fund Elliott Management has told investors that Nvidia is in a “bubble”, and the artificial intelligence technology driving the chipmaking giant’s share price is “overhyped”.The Florida-based firm, which manages about $70bn in assets, said in a recent letter to clients that the megacap technology stocks, particularly Nvidia, were in “bubble land” and it was “sceptical” that Big Tech companies would keep buying the chipmaker’s graphics processing units in such high volumes.AI is “overhyped with many applications not ready for prime time”, Elliott wrote in the letter sent this week and seen by the Financial Times.Many of AI’s supposed uses are “never going to be cost efficient, are never going to actually work right, will take up too much energy, or will prove to be untrustworthy”, it added.Elliott declined to comment.Its warning comes as chip stocks, which have enjoyed a huge rally driven by investor fervour over the potential for generative AI, take a tumble on concerns about whether big companies will continue to spend heavily on AI. Intel shares fell 20 per cent following the US market close on Thursday after the chipmaker revealed plans to cut about 15,000 jobs.Nvidia dominates the market for the powerful processors needed to build and deploy large AI systems such as the technology behind OpenAI’s ChatGPT. Companies including Microsoft, Meta and Amazon have been spending tens of billions of dollars to build out AI infrastructure in recent months, with much of that capital going to Nvidia. At the same time, many of its biggest clients are also developing their own rival chips. Its stock has fallen more than 20 per cent since late June, when it briefly became the world’s largest company with a market capitalisation of more than $3.3tn, as anxiety about the sustainability of AI investment took hold on Wall Street. However, the chipmaker is still up about 120 per cent this year and more than 600 per cent since the start of last year.Elliott told clients in the letter that it had largely steered clear of bubble stocks, for instance in the Magnificent Seven. Regulatory filings show Elliott owned a tiny position, worth about $4.5mn, in Nvidia at the end of March, although it is unclear how long it held it for. The hedge fund has also been wary of betting against high-flying big technology stocks, saying that shorting them could be “suicidal”.Elliott, which was founded by billionaire Paul Singer in 1977, added in its client letter that, so far, AI had failed to deliver a promised huge uplift in productivity. “There are few real uses,” it said, other than “summarising notes of meetings, generating reports and helping with computer coding”. AI, it added, was in effect software that had so far not delivered “value commensurate with the hype”.The firm, which gained about 4.5 per cent in the first half of this year, has only lost money in two calendar years since launch.As to when the market bubble may burst, Elliott said this could happen if Nvidia reported poor numbers and “breaks the spell”.

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