Jensen Huang says AI boom won't bust soon, claims 'this time is different' for chip industry

Nvidia CEO Jensen Huang denies the chip boom will go bust soon and actually utters the infamous phrase 'this time is different' | Fortune

The semiconductor industry is notorious for going through boom-and-bust cycles, but Nvidia CEO Jensen Huang doesn't think a downturn is imminent, although he echoed reasoning that's been used to justify past bubbles. After chip stocks soared on the AI frenzy, they have sold off hard in recent weeks amid renewed fears about the sustainability of massive capital expenditures. That's despite strong earnings and guidance from top chipmakers as well as persistent shortages due to insatiable demand. In an interview with Axios cofounder Mike Allen, Huang was asked if the sector is due for a bust, and he replied "no, not for a while." Allen then offered "so this time is different?" "This time is different because this is not demand driven," Huang said. "This time is different because it's not seasonal. It's not demand driven means seasonal-demand driven. This is industrially driven, meaning the fundamental technology of computers is changing." He added that the world needs a whole new layer of infrastructure, namely AI, which requires chips, estimating that the industry must become five to 10 times larger over the next decade. Of course, coming from the CEO of the top AI chip supplier, such optimism is not surprising. But what's notable is his endorsement of "this time is different." That's been used in the past to argue why astronomical gains can continue on their trajectory and continue defying fundamentals or logic, such as during the dot-com bubble. The phrase is now so infamous it's considered a red flag whenever there's even a hint of it creeping into buoyant forecasts, similar to now-rueful declaration of "mission accomplished." Meanwhile, hyperscalers have been committing hundreds of billions of dollars a year on capital expenditures to build out AI infrastructure as quickly as possible. While they previously drew on their enormous cash-generating operations for the capex, it's no longer enough anymore, and even Alphabet recorded negative cash flow. As a result, tech giants are issuing more debt. Huang was pressed on whether he's worried that Nvidia's customers are tapping the bond market to buy his chips. He answered that he's not, pointing to the shift in computing. "So this future is a whole new way of doing computing that's fundamentally different than the past, and we need a lot more computers," he explained. AI has also been profitable for companies like Anthropic, especially as customers discover how useful agents can be, Huang noted. AI is now at an inflection point, where more of the technology must be built as it generates profits and boosts productivity. He acknowledged that the bubble will burst someday, but it won't happen anytime soon as the AI buildout is still in the early stages. And the limited supplies of chips, land, power, and construction workers that are holding back even faster growth are actually beneficial, as they push out the timeline when supply eventually exceeds demand, Huang argued. "We basically are constrained in every single direction, in every single way," he said. "That constraint is good. That constraint is what holds the system back. So that gives us plenty of time to go build out these infrastructure."

Jensen Huang says AI chip boom is far from over

Nvidia Chief Executive Jensen Huang said the semiconductor boom tied to artificial intelligence has years left to run and that the chip industry must expand fivefold to tenfold over the next decade to meet demand. In an interview published on July 25, Huang told Axios co-founder Mike Allen that a bust in the chip sector was not near. "No, not for a while," Huang said when asked whether the industry was due for a downturn. Huang also embraced the phrase "this time is different," which investors often associate with past market bubbles. He said the current wave of demand was not consumer-led but "industrially driven," adding that "the fundamental technology of computers is changing." Huang said the world needs a new layer of computing infrastructure dedicated to AI. He said limits on chips, power, land and construction labor were helping restrain overbuilding that often comes before a downturn. "We basically are constrained in every single direction, in every single way," Huang said. "That constraint is what holds the system back." Huang said a bust would eventually come, but not soon. He has previously projected that global AI infrastructure investment could reach $3 trillion to $4 trillion a year by the end of the decade. The interview followed Huang's visit to Tokyo, where Nvidia announced partnerships with Fujitsu, Toyota, Fanuc, Kawasaki Heavy Industries and Kioxia to deploy what the company calls "physical AI" in robots and factory systems. Huang said Japan was a natural fit for physical AI because of its manufacturing base. He said Nvidia plans to build a Vera Rubin AI factory in Japan with 140 megawatts of computing power by 2028. The collaboration with Fujitsu and other robotics companies aims to combine Japan's mechatronics expertise with Nvidia's AI platforms for factories and autonomous robots, according to the source material. Chip stocks have sold off in recent weeks amid skepticism about whether heavy AI spending can be sustained. Hyperscalers including Alphabet have posted negative free cash flow as they tap bond markets to fund infrastructure buildouts, and Huang dismissed concern that customers were borrowing to buy Nvidia chips. He said the spending reflected a permanent change in computing rather than cyclical demand.

Jensen Huang pooh-poohs the Idea of an AI Bust, Says This Time It's Different

The semiconductor industry is known for its vagaries and boom-bust cycles but Nvidia's Jensen Huang does not perceive a downtrend anytime soon. However, the fact is that in a recent interview he did use the oft-repeated reasons to claim that there was no AI boom and even if it were so, there wouldn't be any bust. In an interaction with Axios co-founder Mike Allen recently, the Nvidia CEO said he does not share the doomsday predictions of an AI boom going bust anytime soon and claims that if anything, the current spending wave is being driven by the shift in compute infrastructure rather than any hype associated with it. You can watch the interview here. Huang's reactions come at a time when AI chip stocks that had soared on compute infra frenzy have witnessed a sell-off in recent weeks amidst fears over sustainability of such massive capital expenditures. This, despite strong earnings and guidance from the top chipmakers as well as cloud and AI giants like Alphabet. "This time is different because this is not demand driven," Huang said in response to a question from Allen. "This time is different because it's not seasonal. It's not demand driven means seasonal-demand driven. This is industrially driven, meaning the fundamental technology of computers is changing." However, his views were the same oft-repeated ones that we've heard for over 18 to 24 months now. That the world requires more AI infrastructure, which requires truckloads of microprocessors and that its demand would exceed supply for the next decade or so. What Huang seems to have left out of his rhetoric is the growing concerns over AI costs for the consumers and the impact that the Chinese AI models have had on such costs. Not to mention the fact that Huang himself articulated against any US-imposed ban on Chinese open-weight models in a joint note with other tech CEOs. In fact, some publications used his words "this time it is different" to mean a red flag, as was the case of the dot-com bubble or the sub-prime crisis when proponents kept claiming that things were different from the last time. In fact, Huang says the semiconductor industry isn't facing the kind of demand cycle that led to previous boom-and-bust cycles. "The bubble will burst someday," he said, but noted that such an event may not happen anytime soon because the AI infrastructure buildout is still in its early days. "This time is different because this is not demand driven. This time is different because it's not seasonal. It's not demand driven means seasonal-demand driven. This is industrially driven, meaning the fundamental technology of computers is changing," Huang said. That it doesn't tally with Nvidia's circular deals with several AI companies is another matter. Huang's view on circular deals was that he wasn't unduly worried about Nvidia customers borrowing to buy or order AI chips. Because, this shift to AI represents a long-term change in computing. "So this future is a whole new way of doing computing that's fundamentally different than the past, and we need a lot more computers," he said. However, what came next was a tad surprising. He claimed that AI was generating profits for companies like Anthropic as more customers adopt AI agents and other advanced tools. Maybe, he missed the news reports of how several companies have moved away, including big guns like Microsoft, who are looking towards China or their own LLMs. Having said so, Huang admitted that shortage of chips, land, electricity and construction workers are slowing down the pace of AI expansion and growth. However, he argues that this is a good thing given that it is giving the industry more time to build the infrastructure needed before supply catches up with demand. We basically are constrained in every single direction, in every single way," Huang said. "That constraint is good. That constraint is what holds the system back. So that gives us plenty of time to go build out these infrastructure." Let's hope Jensen Huang is seeing the future from an angle that makes more sense that the majority of nay-sayers, who are waiting with bated breath.

Jensen Huang Says AI Boom is Different, Dismisses Bubble Fears

Artificial intelligence is unlikely to face a bubble burst anytime soon, according to NVIDIA CEO Jensen Huang, who believes the current AI boom is driven by a fundamental shift in computing rather than short-term market hype. His remarks come as investors continue to debate whether massive spending on AI infrastructure can be sustained. Speaking during an interview with Axios co-founder Mike Allen, Huang argued that the semiconductor industry's current growth cycle differs from previous booms. He said that the demand is not being driven by seasonal buying patterns or temporary trends but by a structural transformation in computing. According to Huang, AI requires an entirely new computing infrastructure, with businesses, governments and developers investing heavily in data centers and advanced processors. He believes the industry will need to expand several times over the next decade to meet rising AI requirements.