Nvidia CEO Sees AI Market Expanding to $4 Trillion Despite Investor Caution
Nvidia CEO Jensen Huang has dismissed fears that the surge in artificial intelligence chip spending is slowing. Speaking on Wednesday, he forecasted that the AI infrastructure market could reach $3 trillion to $4 trillion within the next five years.
Despite his optimistic view, Nvidia’s shares dropped 1.56% to $178.77 in premarket trading on Thursday. The decline followed the company’s subdued third-quarter sales forecast, which excluded revenue from China due to ongoing US-China trade tensions.
Confident Outlook Amid Market Concerns
Huang aimed to calm investors worried about slowing growth at Nvidia, which has become a central player in the current AI investment boom. His outlook comes as some analysts and tech leaders warn of overheating in AI-related stocks.
“A new industrial revolution has started. The AI race is on,” Huang said. “We see $3 trillion to $4 trillion in AI infrastructure spend by the end of the decade.”
Big tech firms and hyperscalers – owners of large data centres – continue to drive demand for Nvidia’s high-performance chips. This demand has helped fuel Nvidia’s rapid growth, despite some signs of investor fatigue in the broader AI sector.
Strong Demand from Hyperscalers and Beyond
Matt Orton of Raymond James Investment Management said Nvidia is still showing solid growth. He noted that large tech firms continue to invest heavily in data centres, which benefits Nvidia.
“If anything, this just highlights that there’s a lot of durability to this (AI) trade,” Orton said. “You’re not seeing any sort of sign of a slowdown being reflected in the results of Nvidia.”
Nvidia’s chips remain in high demand. For instance, a customer outside China recently bought $650 million worth of Nvidia’s H20 chips – a version designed for the Chinese market.
Data Centre Spending Could Fuel Billions in Revenue
Huang’s forecast is based partly on the $600 billion in expected data centre spending this year from major clients such as Microsoft and Amazon. According to him, Nvidia can earn up to $35 billion from a single $60 billion data centre.
He also highlighted that demand for Nvidia’s high-end Blackwell chips is strong through 2026. Even its older Hopper processors are still being purchased at a rapid pace.
“When you have something that is new, and it’s growing as fast as it is,” said Thomas Martin of Globalt Investments, “it’s evidence that we’re in the early stages” of the AI boom.
Nvidia’s second-quarter net income even surpassed Apple’s projected third-quarter profit, showing the chipmaker’s strong position in the current market.
with inputs from Reuters
