Nvidia boss dispels fears AI chips output will lag demand 

The Nvidia co-founder believes there’s a trillion dollars’ worth of data centre infrastructure around the world that has to change from general purpose computing to accelerated computing

Nvidia CEO Jensen Huang said: “We’re focused on increasing our supply.”

Nvidia chief executive Jensen Huang, fresh off an upbeat quarterly report that sent his company’s shares soaring, dispelled one of investors’ biggest concerns: That chip production won’t keep up with demand.

Though Nvidia didn’t give long-term projections, Mr Huang said that supply will “substantially increase for the rest of this year and next year”. The company relies on vendors such as Taiwan Semiconductor Manufacturing and Samsung Electronics for components, and a lack of adequate inventory was seen as a challenge to its growth run. 

In an interview, Mr Huang stressed that the company was doing everything it can to stay on top of surging demand. “We’re focused on increasing our supply,” Mr Huang said. “We have to do that with great urgency, and we are.” 

Nvidia has a commanding lead in the market for artificial intelligence processors, which handle the heavy workloads needed to power tools like OpenAI’s ChatGPT. Its position has made it the world’s most valuable chipmaker — with a market capitalisation above $1 trillion. The shares hit a record high on Thursday. And the shift to AI is only beginning, Mr Huang said.

Accelerated computing, which speeds through specific tasks by breaking them up into smaller parts and working on them in parallel, is taking over, he argues. “The big mega theme is that the world’s computer data centres are transitioning to a new model, from general purpose computing to accelerated computing,” he said. 

The Nvidia co-founder believes there’s a trillion dollars’ worth of data centre infrastructure around the world that has to make this change. The company reported sales of $13.5bn (€12.4bn) in the last quarter, more than double from a year earlier.

Such broad shifts happen rarely and bring huge opportunities for companies that have the right products to exploit them, Huang said. 

He said:
Every 15 years, you see a new platform shift. It’s happening right now in real time.

“Nvidia has shown that the demand for AI technology remains strong despite what is going on elsewhere,” said Stuart Cole, chief macro economist at Equiti Capital in London. “The potential remains for equity markets to soften again. But I can easily see AI-related stocks, like Nvidia, and tech shares probably more generally, being seen as a safe haven in the equity world,”  Mr Cole said. 

“There have been questions about whether Nvidia would grow into its valuation, and now it seems like there’s a decent chance it will,” said Michael Kirkbride, portfolio manager at Evercore Wealth Management. “This is not crazy expensive, given the kind of extraordinary growth we’re seeing.”

Next in focus for stock market investors will be the gathering of top central bankers at Jackson Hole, with US Federal Reserve Chair Jerome Powell’s speech due on Friday. 

Bloomberg