Nvidia CEO Jensen Huang addresses the big question on investors’ mindsNvidia’s stock has bounced and is now up 4%
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Emily Bary
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Published: Sept. 11, 2024 at 12:40?p.m. ET
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 Nvidia’s Jensen Huang spoke at a Goldman Sachs conference on Wednesday. He showed off new products earlier this year.Photo: josh edelson/Agence France-Presse/Getty Images
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One big question for Nvidia Corp. investors these days: Can artificial intelligence generate enough revenue to justify heavy past and future spending on graphics processing units and other AI hardware?
Chief Executive Jensen Huang must be getting this question a lot. He answered it on the company’s earnings call in late August, but his response wasn’t enough to sway Wall Street, as Nvidia shares
NVDA
8.15%
headed lower after the report. Huang took another crack at the topic at a Wednesday morning Goldman Sachs event.
See also: Nvidia’s stock has been a huge S&P 500 driver. Here’s why its influence could wane.
It’s important to understand where generative AI is in the cycle. Now, “infrastructure players like ourselves and all the cloud service providers put the infrastructure in the cloud so that developers could use these machines to train the models, fine-tune the models, guardrail the models, so and so forth,” Huang said.
You can’t argue with the returns on investment for that, according to Huang.
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‘The return on that is fantastic because the demand is so great that … every dollar that they spend with us translates to $5 worth of rentals. And that’s happening, you know, all over the world, and everything is all sold out. And so the demand for this is just incredible.’
— Nvidia CEO Jensen Huang
Nvidia shares have bounced and are up about 4% at recent check. They were down fractionally earlier in the session. The S&P 500
SPX
1.07%
has also bounced off its morning lows.
Huang also cheered massive productivity gains from AI applications, things that he can see within his own company, in how his own employees do their jobs.
“There’s not one software engineer in our company today who doesn’t use co-generators, either the ones that we build ourselves for CUDA or USD, which is another language that we use in the company, or Verilog, or C and C++,” Huang said.
That means “the days of every line of code being written by software engineers, those are completely over.” In other words, Nvidia’s software engineers, and others making use of AI in the coding process, have constant “companion digital engineers” working alongside them.
Read: Nvidia is expected to grow quickly through 2026. These companies may grow faster.
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Huang also discussed the cost of running Nvidia GPUs, noting that it does indeed go up somewhat for customers when they use the company’s products to augment central processing units.
Let’s say the cost doubles. “But you reduce the computing time by about 20 times,” Huang said. “And so you get a 10-times savings, and it’s not unusual to see this kind of ROI for accelerated computing.”
But will Huang’s latest remarks actually give investors more confidence in the company’s ability to sustain strong revenue growth into calendar 2026 and beyond, which would hinge on continued robust demand for the company’s AI hardware? He called out OpenAI’s ChatGPT and Microsoft Corp.’s
MSFT
2.13%
Copilot as examples of tools helping with productivity, and he also noted returns for cloud customers. A report from Barclays analysts this summer, though, noted that there may need to be additional prominent beneficiaries.
“Based on our preliminary work here, the consensus estimate for hyperscaler AI [capital expenditures] in 2026 is enough to support the existing internet plus 12,000 new ChatGPT-scale AI products,” Barclays analysts wrote in late June.
But will that happen? “Silicon Valley is buzzing about AI changing the world, AI agents, digital employees, [artificial general intelligence], etc — and we do expect lots of new services that will bring some of this bull case to light, but probably not 12,000 of them,” the analysts said.
Read: Nvidia investors don’t need to worry — unless the stock falls below these prices |
