Nvidia CEO Jensen Huang needed no prompting to address the elephant in the room on Wednesday. There’s been a lot of talk about an AI bubble, he said on an earnings call before getting to his main point: “From our vantage point, we see something very different.”
Huang spent about five minutes trying to explain how the chipmaker, which has become the world’s most valuable publicly traded company over the past three years, would be able to keep up with unprecedented customer demand. His thesis is that AI is taking over the world, and Nvidia chips will be sorely needed to power the ongoing technological revolution. “All industries, at every stage of AI, for all diverse computing needs in the cloud, and from cloud to enterprise to robots,” will need Nvidia’s products, Huang said.
The CEO’s pep talk ultimately drew mixed reactions from Wall Street. Nvidia shares have fallen about 10 percent in recent weeks after hitting an all-time high in late October. Shares rose about 5 percent in after-hours trading Wednesday after Nvidia reported record quarterly sales and Huang made his anti-bubble comments. But this rise was not enough to fully compensate for the recent selloff.
Nvidia has seen tremendous success in the three years since OpenAI introduced ChatGPT and there has been a huge increase in demand for the company’s GPUs, which are used to train and operate generative AI systems. Nvidia dominates the global market for GPUs, and its latest releases are in high demand with demand far exceeding supply. On Wednesday, Nvidia executives reiterated that it has about $500 billion of unfilled orders.
The company has used its newfound wealth to buy back its own shares and invest billions of dollars in AI companies, including top users and customers of its chips, such as ChatGate developer OpenAI, data center operator CoreWave and Elon Musk’s XAI, which develops the chatbot Grok.
Nvidia’s deals have raised concerns among some investors that the company is not driving consistent sales growth. AI industry executives argue that it is important to partner closely with Nvidia to gain access to chips and technical support, and that their revenues will eventually grow enough to fund their GPU purchases.
On Wednesday’s call, Huang addressed a financial analyst’s question about the rationale for investing in companies like OpenAI. “Our partnership with them allows us to work deeper from a technology perspective so we can support their accelerated growth,” Huang said. “I have every expectation that the investment will yield exceptional returns.”