Tech industry capital spending on AI infrastructure is justified, reasonable and sustainable, Nvidia CEO Jensen Huang said on CNBC’s “Half Report” on Friday.
“The reason for this is that all the cash flows of these companies will start to grow,” Huang said.
Shares of Nvidia rose 7% in Friday trading.
Huang’s comments come after major Nvidia customers Meta, Amazon, Google and Microsoft reported their latest gains in the last two weeks. These companies have told their investors that they plan to dramatically increase spending on AI infrastructure. In general, these hyperscalers can spend 660 billion for capital expenditures this year, most of that spending will go toward buying Nvidia chips.
Wall Street had a mixed response to the spending hike Meta and Of the alphabet collects funds, but punishes Amazon and Microsoft.
According to Huang, the “biggest infrastructure build-out in human history” is driven by “sky-high” demand for computing power that AI companies and hyperscalers can use to make more money. He gave concrete examples of what Nvidia customers are doing with AI.
Meta is using AI to move from a recommendation system that runs on processors to one that uses generative AI and agents, Huang said. He said Amazon Web Services’ use of Nvidia chips and AI will affect how the retail giant offers products, and Microsoft will use Nvidia-powered AI to improve its software, Huang said.
He also praised OpenAI and Anthropictwo leading artificial intelligence labs using Nvidia chips through cloud providers. Nvidia invested $10 billion in Anthropic last year, and Huang said earlier this week that the chipmaker would invest Will be heavily involved in OpenAI’s next fundraising round.
“Anthropic is making great money. Open AI is making great money,” Huang said. “If they have twice as much computing, revenues will quadruple.”
According to him, all graphics processing units that Nvidia has sold in the past are even six-year-old chips Like the A100 — is currently being leased, indicating a steady demand for AI computing power.
“As long as people continue to pay for AI and AI companies continue to profit from it, they’re going to double, double, double and double,” Huang said.