Nvidia CEO Jensen Huang rejects AI bubble claims, says critics are missing the point

MUMBAI: Nvidia CEO Jensen Huang has pushed back against criticism that the chipmaker is helping inflate an artificial intelligence bubble by investing heavily in the companies that buy its technology.

“I think they’re missing a very big point,” Huang said in an interview with CNBC’s Mad Money, after Nvidia reported better-than-expected quarterly results.

Huang argued that today’s leading AI startups are fundamentally different from conventional technology startups because of the enormous amounts of capital required to develop and operate frontier AI models.

“When was the last time anybody heard of a startup that needed billions of dollars to get off the ground? That just never happened. But that’s really the nature of AI,” he said.

Nvidia has built up significant cash reserves through its dominant position in the market for chips used to power large AI models and services. It has increasingly deployed that capital across the broader AI ecosystem, investing in companies including OpenAI and Anthropic, as well as so-called neocloud providers that rent Nvidia-powered computing capacity.

The chipmaker has also moved beyond equity investments, providing financial support for large-scale data centre projects.

Nvidia has committed $105 billion towards a major computing campus being developed in Ohio, where OpenAI is expected to be the primary tenant. It has also announced a partnership with major Wall Street firms to help arrange as much as $500 billion in financing for data centres.

That growing role has raised questions over whether Nvidia is effectively helping create the demand for the chips it sells.

Critics have described some of these arrangements as “circular financing”, where a company funds customers who then use that capital to purchase products or services from the same company.

Such structures can raise concerns about whether demand and sales are genuinely organic or are being supported by financing within the same ecosystem.

Huang rejected that interpretation, arguing that frontier AI companies require a different type of financial and strategic partner because of the scale of investment involved.

He said Nvidia wants to work with leading AI companies both as an investor and as a technology partner. The company hopes these businesses will build their technology infrastructure around Nvidia’s platform as they scale.

According to Huang, many AI companies cannot simply raise the required funds through conventional borrowing because they lack the financial track record and investment-grade status needed to secure cheaper capital.

He positioned Nvidia’s involvement as filling that funding gap at a time when the industry is attempting to build AI infrastructure on an unprecedented scale.

Huang also sought to ease concerns about the risks Nvidia is taking by investing in AI companies and data centres.

He argued that the computing infrastructure being built with Nvidia technology is not dependent on a single customer. If one customer runs into financial difficulties, the infrastructure can potentially be redeployed for other customers and workloads.

Huang said he remains confident that Nvidia’s investments will generate strong returns and characterised the overall risk to the company as low.

The company’s latest financial performance has given investors reason to share some of that confidence. Nvidia reported $96.2 billion in quarterly revenue for fiscal 2027 second quarter, more than double the figure from a year earlier. Data centre revenue rose 117 per cent to $89 billion.

Nvidia is also forecasting roughly 70 per cent revenue growth for fiscal 2028. Its shares rose about 4 per cent in extended trading following the results.

Yet the stock’s relatively modest 12 per cent gain for the year reflects lingering investor concerns over how sustainable the broader AI investment boom will prove to be.

For Huang, however, the argument is straightforward: AI is not following the usual startup playbook. The technology requires extraordinary amounts of capital, and Nvidia is positioning itself not just as the supplier of the chips powering that revolution, but increasingly as one of its financiers.