Nvidia CEO Dismisses Concerns of an AI Bubble. Investors Remain Skeptical

Jensen, CEO of NVIDIA Huang needed no prompting Wednesday to address the elephant in the room. “There has been a lot of talk about an AI bubble,” he said on a conference call before quickly addressing his main point: “From our perspective, we see something very different.”

Huang then 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 meet unprecedented demand from its customers. His thesis is that AI is taking over the world and that Nvidia chips will be sorely needed to power this ongoing technological revolution. “Every industry, every phase of AI, for all the various computing needs in a cloud, and also from cloud to enterprise to robots,” will need Nvidia’s products, Huang said.

The CEO’s pep talk ultimately drew mixed reactions on Wall Street. Nvidia shares have fallen about 10% in recent weeks after hitting an all-time high in late October. Shares rose about 5% 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 offset the recent sell-off.

Nvidia has enjoyed three years of breakneck success since OpenAI launched ChatGPT and sparked a massive surge in demand for the company’s GPUs, which are used to train and operate generative AI systems. Nvidia dominates the global GPU market and its latest releases have become highly sought after, with demand far outstripping supply. On Wednesday, Nvidia executives reiterated that they have about $500 billion in pending orders.

The company used its newfound wealth to buy back its own shares and invest billions of dollars in AI companies, including major users and customers of its chips, such as ChatGPT developer OpenAI, data center operator CoreWeave, and Elon Musk’s xAI, which develops the Grok chatbot.

Nvidia’s deals have fueled concerns among some investors that the company is not sustainably sustaining its sales. AI industry executives say a close partnership with Nvidia is crucial for access to chips and technical support, and that their revenue will eventually grow enough to fund their GPU purchases.

On Wednesday’s call, Huang answered a financial analyst’s question about the rationale for investing in companies such as OpenAI. “The partnership we have with them allows us to work even deeper from a technical perspective, so we can support their accelerated growth,” Huang said. “I fully expect this investment to result in extraordinary returns.”