NVIDIA CEO Jensen Huang stated that the demand for AI cloud infrastructure is “incredibly high,” despite investors growing concerns about the debt-driven expansion in this industry.
On Thursday, Jensen Huang responded to external concerns regarding the so-called neoclouds business model during an interview on the program Morning Call on CNBC. neoclouds refers to companies that provide specialized computing infrastructure for artificial intelligence.
Jensen Huang said, “The demand for neoclouds is incredibly high. Their capabilities are extraordinary.”
At the time of his remarks, as one of the largest listed neoclouds, CoreWeave is facing a rigorous review of its financial condition. In recent days, analysts from HSBC and Bernstein have released bearish research reports on CoreWeave.
The stock has fallen by 50% in the past six months and tumbled 4% during pre-market trading on Thursday. HSBC stated this week that it expects the price of CoreWeave to fall another 35% or more.
As companies heavily borrow to build data centers and purchase chips, investors are growing more concerned about the debt financing that supports the craze around AI.
The continuously rising bond yields are also increasing financing costs, and the interwoven investment relationships among AI companies have exacerbated market concerns about bubbles.
On Thursday, NASDAQ futures, which are dominated by technology stocks, came under pressure and fell by 1.7%.
CoreWeave has become the focus of market concerns regarding AI transactions. According to its regulatory documents, as of June, the company had incurred a considerable debt of $35.6 billion, which was used to finance its rapid expansion.
In January, NVIDIA invested another $2 billion in CoreWeave. NVIDIA is not only a major investor in CoreWeave but also its supplier, highlighting the close financial ties that support certain businesses within the AI industry.
Jensen Huang did not mention CoreWeave by name on Thursday, but he believes that the biggest challenge facing the entire industry is access to capital, rather than demand.
Jensen Huang said, "Because there is such strong demand in many areas of AI, capital has become scarce."
"This issue will be resolved," he added.
Last week, Jensen Huang explicitly defended CoreWeave. He told Bloomberg that the company's "strength is improving every day."
He said, "I am very optimistic. Their capital costs are actually decreasing."
On Thursday, Jensen Huang also stated that NVIDIA is working to make its computing hardware a financiable asset, claiming that its durability and productivity will help neocloud companies secure more loans.
He said, "It is now becoming a category of asset."
