Today's market is more fragile than during the dot-com bubble because value is even more concentrated in a few tech giants. Ten companies now represent 40% of the S&P 500. This hyper-concentration means the failure of a single company or trend (like AI) doesn't just impact a sector; it threatens the entire global economy, removing all robustness from the system.

Apple's deep reliance on China is not just about cost but a 25-year investment in a manufacturing ecosystem that can produce complex products at immense scale and quality. Replicating this unique combination in India or elsewhere is considered fanciful.

NVIDIA's market dominance and the market's reliance on its performance have elevated it to a systemically important institution. Its debt is now perceived as safe as government-backed bonds, reflecting a "too big to fail" status that poses a national security concern due to extreme market-wide concentration risk.

Restricting sales to China is a catastrophic mistake that creates a protected, trillion-dollar market for domestic rivals like Huawei. This funds their R&D and global expansion with monopoly profits. To win the long-term AI race, American tech must be allowed to compete everywhere.

The real long-term threat to NVIDIA's dominance may not be a known competitor but a black swan: Huawei. Leveraging non-public lithography and massive state investment, Huawei could surprise the market within 2-3 years by producing high-volume, low-cost, specialized AI chips, fundamentally altering the competitive landscape.

The global economy's dependence on AI has created a massive concentration of risk in NVIDIA. Its valuation, exceeding the entire German stock market, makes it a single point of failure. A significant drop in its stock—which could still leave it overvalued—would have catastrophic ripple effects with nowhere for capital to hide.

While headlines focus on advanced chips, China’s real leverage comes from its strategic control over less glamorous but essential upstream inputs like rare earths and magnets. It has even banned the export of magnet-making technology, creating critical, hard-to-solve bottlenecks for Western manufacturing.

An emerging geopolitical threat is China weaponizing AI by flooding the market with cheap, efficient large language models (LLMs). This strategy, mirroring their historical dumping of steel, could collapse the pricing power of Western AI giants, disrupting the US economy's primary growth engine.

China is explicitly subsidizing domestic semiconductor firms through its National Integrated Circuit Industry Investment Fund. This state-backed capital is the key driver behind its policy to achieve technological independence and replace foreign companies like NVIDIA.