Ankara: Nvidia CEO Jensen Huang defended the chipmaker's growing financial support for artificial intelligence companies, asserting that the investments represent a 'once-in-a-generation' opportunity and pose limited risk to the company. Huang told CNBC that developing and deploying AI requires unprecedented amounts of capital, with some startups needing tens of billions of dollars before becoming profitable.
According to Anadolu Agency, Huang highlighted that this is the first generation of startups requiring such significant funding, emphasizing the capital-intensive nature of AI that sets it apart from previous technology startups. Nvidia has leveraged the cash from the rising demand for its AI chips to invest across the industry, including in model developers like OpenAI and Anthropic, as well as cloud providers offering Nvidia-powered computing infrastructure.
The chipmaker has also extended its role in financing data center projects, including providing $105 billion in financial support for a computing campus under construction in Ohio, where OpenAI is expected to be the tenant. Nvidia recently announced a partnership with major Wall Street firms to arrange up to $500 billion in data center financing.
These initiatives have sparked criticism that Nvidia might be engaging in 'circular financing,' where a company funds customers who then use the money to purchase its products. Critics suggest this could artificially inflate demand and revenue, drawing parallels with practices from the dot-com bubble era. However, Huang dismissed these concerns, stating that Nvidia aims to invest in leading AI developers, assist them in securing computing capacity, and encourage them to build their ecosystems on the company's technology.
Huang explained that many frontier AI companies lack the financial history or investment-grade credit profiles to independently obtain low-cost financing, thereby creating a role for Nvidia's financial support. He also noted that Nvidia's exposure would be limited if any supported company encountered financial difficulties, as the computing infrastructure could be reassigned to other customers.
Huang expressed confidence in the financial strategy, stating, "The money we've invested is going to generate tremendous returns. I think the risk is low." His comments followed Nvidia's announcement of better-than-expected fiscal second-quarter results, with revenue more than doubling from a year earlier to $96.2 billion, and data center revenue surging 117% to $89 billion. Nvidia shares rose around 4% in extended trading following the results.