Nvidia rises 7% as CEO says $660 billion capex buildout is sustainable
The tech industry’s increasing capital expenditure on AI infrastructure is justified, appropriate and sustainable. Nvidia CEO Jensen Huang said on CNBC’s “First Half Report” on Friday:
“This is because the cash flows of all these companies will start to increase,” Huang said.
Nvidia shares rose 7% in Friday trading.
Huang’s comments come after key Nvidia customers Meta, Amazon, Google And Microsoft reported its latest earnings over the past two weeks. These companies have told investors they plan to significantly increase spending on AI infrastructure. In total, these hyperscalers can spend $660 billion in capital expenditure Most of the spending this year went to buying Nvidia’s chips.
Wall Street had a mixed reaction to increased spending; It boosted shares of Meta and Alphabet but punished Amazon and Microsoft.
Huang said the “largest infrastructure build in human history” is driven by “very high” demand for computing power, which AI companies and hyperscalers can use to make more money. Nvidia gave specific examples of what its customers are doing with AI.
Huang said Meta is using AI to move from a recommendation system running on CPUs to one using generative AI and agents. Amazon Web Services’ use of Nvidia chips and AI will influence how the retail giant recommends products, he said, and Microsoft will use Nvidia-backed AI to improve its enterprise software.
He also praised OpenAI and Anthropic, two leading AI labs that use Nvidia chips through their cloud providers. Nvidia invested $10 billion in Anthropic last year, and Huang said earlier this week that the chipmaker would invest heavily in OpenAI’s next round of fundraising.
“Anthropic is making big money. Open AI is making big money,” Huang said. “If they could do twice as much computing, revenues would quadruple.”
He said that all the graphics processing units Nvidia has sold in the past (even six-year-old chips like the A100) are now leased, reflecting continued demand for AI computing power.
“To the extent that people continue to pay for AI and AI companies can profit from it, they will continue to double, double, double, double,” Huang said.
