Nvidia rises 7% as Jensen Huang says $660 billion capex buildout is sustainable

Nvidia CEO Jensen Huang expressed strong confidence in the sustainability of the tech sector's escalating investments in AI infrastructure during an appearance on CNBC's "Halftime Report." He emphasized that the increasing cash flows from major companies support this trend, leading to a notable 7% rise in Nvidia shares on Friday. Huang's remarks come on the heels of significant earnings reports from major Nvidia clients, including Meta, Amazon, Google, and Microsoft. These tech giants are poised to dramatically boost their investments in AI infrastructure, with projections indicating a staggering $660 billion in capital expenditures this year. A significant portion of this spending is expected to be directed toward acquiring Nvidia's advanced chips. The market reaction has been mixed; while Meta and Alphabet saw their stock values increase, Amazon and Microsoft faced declines. Huang noted that this expansive infrastructure development represents the "largest buildout in human history," spurred by a soaring demand for computing power that AI companies and hyperscalers can leverage for profit. He highlighted specific applications of AI by Nvidia's customers. For instance, Meta is transitioning from traditional CPU-based recommendation systems to innovative generative AI solutions. Similarly, Amazon Web Services' use of Nvidia chips will transform how it recommends products, and Microsoft plans to enhance its enterprise software with Nvidia-powered AI. Huang also commended leading AI labs OpenAI and Anthropic for their effective use of Nvidia technology via cloud services. Nvidia's $10 billion investment in Anthropic last year reflects a commitment to these partnerships, and Huang indicated that substantial investments would continue in OpenAI's upcoming funding round. He noted the impressive financial performance of both Anthropic and OpenAI, stating that doubling their computing capabilities could potentially quadruple their revenues. Furthermore, he revealed that demand for AI computing remains high, as evidenced by the rental of all Nvidia graphics processing units, including older models like the A100. "As long as AI companies can generate profits, they will keep expanding their capacities exponentially," Huang stated.