Dismissing concern about an end to a spending boom on artificial intelligence chips, Nvidia CEO Jensen Huang on Wednesday projected opportunities will expand into a multi-trillion-dollar market over the next five years, reported Reuters.
The Nvidia CEO tried to reassure investors rattled by indications of slowing growth at the chipmaker. Earlier in the day, Nvidia forecast third-quarter revenue meeting analyst estimates. However, it fell short of the lofty expectations, which sent its share price up roughly one-third this year.
Huang’s bullish outlook contrasts with recent signs of fatigue in AI-focused stocks.
Huang said, as quoted by the Reuters, “A new industrial revolution has started. The AI race is on. We see $3 trillion to $4 trillion in AI infrastructure spend by the end of the decade.”
Meanwhile, experts like Raymond James Investment Management’s head Matt Orton opined mega caps are the ones propelling a lot of the capex.
“The mega caps are the ones propelling a lot of the capex that Nvidia is benefiting from. But obviously Nvidia still is growing, is able to sell,” Reuters quoted Orton as saying.
“If anything, this just highlights that there’s a lot of durability to this (AI) trade… The businesses of these hyperscalers can continue to accelerate, and you’re not seeing any sort of sign of a slowdown being reflected in the results of Nvidia.”
Signs of fatigue:
Despite Nvidia shares having outpaced a roughly 10 per cent gain in the broader market, the AI-facing stocks have shown signs of fatigue. Earlier in August, OpenAI CEO Sam Altman set off alarm bells when he said investors may be “overexcited” about AI.
Arguing that Nvidia’s technological advances allow customers to process increasing amounts of data while using less energy, Huang said, “The more you buy, the more you grow. The buzz is: everything sold out.”
Huang said that a customer outside China bought $650 million worth of Nvidia’s H20 reduced-capability chip aimed at the Chinese market in the latest quarter.
He based his forecast in part on the $600 billion he expects for data center capital spending in 2025 and from major customers such as Microsoft and Amazon.
Huang added that Nvidia can capture about $35 billion in revenue from a data center costing as much as $60 billion.
However, Huang’s remarks contrast with a tepid third-quarter sales forecast of about $54 billion, which is slightly ahead of the $53.14 billion average of analyst estimates compiled by LSEG.
Both Huang and Nvidia see little reason for AI chip profit growth to slow as second-quarter net income surpassed the fiscal third-quarter profit of Big Tech peer Apple.
Nvidia’s high-end Blackwell chips are largely spoken for based on 2026 forecasts.
Globalt Investments portfolio manager Thomas Martin said, as quoted by the Reuters, “When you have something that is new, and it’s growing as fast as it is, and with all of the huge capex announcements from the hyperscalers, it’s evidence that we’re in the early stages of the AI boom.”
