The tulip bubble​ is the most famous financial bubble in history, but as historical examples go it is also, in one crucial respect, misleading. That’s because anyone can see the flagrant irrationality which was at work. At peak tulip madness in 1637, rare bulbs were so expensive that a single one was worth as much as a fancy canalside house in Amsterdam. You don’t have to be Warren Buffett to see that the disconnect between price and value was based on delusional thinking.

Most bubbles aren’t like that. Even the South Sea Bubble, the event which gave its name to financial bubbles, had an underlying rationale: who can deny that the expansion of global networks of trade and capital turned out to be a vitally important and vastly lucrative event? Even if all the investors in the original bubble – including Isaac Newton, who realised it was a bubble, but got caught up in the excitement anyway – lost their shirts. The historical pattern is typically that a big, genuine innovation is spotted on the horizon. Money floods in to take advantage. Too much money. The flow of capital is so great that it is impossible to allocate it correctly, and distinctions disappear between what is likely and what is impossible, what is prudent and what is reckless, what might happen and what never could. After the flood of money, the doubts; after the doubts, the crash; and after the crash, the gradual emergence of the phenomenon that got all the speculators so excited in the first place. It happened with the South Sea Bubble, with the many railway manias of the mid-19th century, with the electrification mania of fifty years later and with the dot-com bubble at the turn of this century.

That is where we are now with AI. In the deep historical past of 2018, Apple became the first public company in the world to have a market capitalisation of more than a trillion dollars. Today, each of the ten biggest companies in the world is worth more than $1 trillion. Only one of them, the Saudi oil monopoly, Aramco, has nothing to do with the future value of AI. The top company, Nvidia, is worth $4.45 trillion. Not by coincidence, Nvidia shares are the purest bet you can make on the impact of AI. The leading firms are lending money to one another in circular patterns, propping up turnover and valuations. Colossal amounts of money are pouring in. Is it a bubble? Of course it’s a bubble. The salient questions are how we got here, and what happens next.

How did we get here? That story is among other things a narrative about two men, who gratifyingly correspond to the two main character types of the tech age: academically overachieving immigrant (Elon Musk, Sergey Brin, Sundar Pichai, Satya Nadella) and US-born college dropout (Steve Jobs, Bill Gates, Mark Zuckerberg). Companies founded or run by such men are the first, second, third, fourth, fifth and seventh most valuable in the world. Their combined value is $20.94 trillion – one sixth of the entire world economy.

Let’s begin in medias res. In the spring of 1993, three nerds visited a lawyer in Silicon Valley with the intention of setting up a company to make computer chips. The men were Curtis Priem, Chris Malachowsky and the person they had chosen to be their CEO, Jensen Huang, a Taiwanese-born electrical engineer with a talent for management and business. Malachowsky and Priem, according to Stephen Witt’s Thinking Machine, had complementary skills – they were, respectively, an architect and a chip mechanic. They wanted to make a new kind of chip, optimised for a rapidly growing sector: video games. Their employer, the large chip company LSI Logic, didn’t like the idea, so the three men cooked up a business plan, working mainly in a branch of the 24-hour chain restaurant Denny’s that was accessorised with bullet holes from drive-by shootings. Huang didn’t think the new company was worth launching until they had a credible chance of making $50 million a year in revenue. Fiddling with spreadsheets over long sessions at Denny’s, he eventually made the numbers add up. The three amigos went to see Jim Gaither, a lawyer well known in the Valley. Gaither filled out the paperwork, with the company’s name left as NV, for New Venture. Malachowsky and Priem were entertained by that: they had been playing around with company names that suggested their chip would leave competitors sick with envy. The coincidence was too good to resist. They decided to call their company Nvision. When the lawyer checked, it turned out that Nvision was already taken. They chose a backup: Nvidia.

Good choice of CEO, good choice of name. A third of a century later, Huang is the longest-serving CEO in the industry and Nvidia is the most valuable company in the world. Nvidia’s share of global stock market value is historically unprecedented: its shares make up a greater part of global indices than the entire UK stock market.

Huang had a hard start in life. He arrived in the US in 1973 aged nine, small for his age and not speaking much English. His parents, Hokkien-speakers from Tainan who had emigrated to Bangkok, had attempted to teach him and his brothers English by making them learn ten words a day, chosen at random from the dictionary. They sent Huang to the Oneida Baptist Institute in Kentucky under the mistaken impression it was a posh boarding school. In fact, it was a reform school for unruly boys whom the regular US education system couldn’t handle. Huang’s academic abilities meant that he was put in a class with boys a year older. If you were designing a formula to make a child a target for bullying, you couldn’t do much better. On his first night, Huang’s roommate pulled up his shirt to show him the scars he had accumulated from knife wounds. The newcomer, who stayed at school during the holidays because he had nowhere else to go, was given the job of cleaning the toilets.