Jensen Huang says markets got it wrong on AI threat to software companies as Nvidia posts $68B

Nvidia's Jensen Huang says markets 'got it wrong' on AI threat to software companies

Nvidia CEO Jensen Huang delivers a keynote address at the Consumer Electronics Show in Las Vegas, Nevada, on Jan. 6, 2025. Nvidia CEO Jensen Huang said Wednesday markets have miscalculated the AI threat to software companies in an interview hours after the chip behemoth issued an upbeat sales forecast on strong AI demand. "I think the markets got it wrong," Huang said. "Nobody's going to service better than ServiceNow, and they're going to come up with agents that are really fine-tuned and optimized for the work that uses the tools that they have." "In the end, we need the tools to finish their work and put the information back in a way that we can understand," he told CNBC's Becky Quick. Nvidia's revenue for the fiscal fourth quarter climbed 73% to $68.13 billion from a year earlier, beating analysts' estimates for $66.21 billion. The company issued an upbeat guidance with revenue for the fiscal first quarter to be $78 billion, plus or minus 2%, well above analysts' forecast for $72.6 billion. Investors had grown weary that the massive run-up in spending on AI hardware might not be sustainable, stoking fears of a bubble building in the sector.

Nvidia CEO makes big remark on AI threat to software companies, Jensen Huang claims 'I think the markets got it...'

After the mammoth chip Nvidia posted a strong revenue, CEO Jensen Huang pushed back against the idea that so-called agentic AI will cannibalise the software industry. The tech titan said the markets got it wrong. He said AI agents will rely on existing software tools to get work done, not eliminate them. Nvidia CEO Jensen Huang on Wednesday said markets have miscalculated the AI threat to software companies, hours after the chip giant issued an upbeat sales forecast on strong AI demand. Nvidia CEO Jensen Huang believes investors are misunderstanding a crucial aspect of artificial intelligence. He argues that fears of AI eliminating enterprise software companies are largely misunderstood. "I think the markets got it wrong," Huang said, pushing back on fears that AI agents will cannibalize the enterprise software industry. The remarks of the tech billionaire came as the past few weeks have been challenging for the software industry. Anthropic, the company behind Claude Cowork, has shaken shares of several SaaS firms, including TCS and Infosys, as investors worry that AI tools like Claude Cowork could eventually replace traditional software services. However, Nvidia CEO Jensen Huang believes the market is misreading the situation entirely. The Nvidia chief was asked about the fears that legacy software companies could be replaced by AI. According to Jensen Huang, AI will not replace software tools, but use it on behalf of humans. Jensen Huang said he envisions a future where AI agents, rather than humans directly operating AI tools, carry out tasks on our behalf. "That's the reason why we also say agents are tool users," he explained. According to the Nvidia CEO, legacy enterprise platforms such as SAP and ServiceNow will continue to play a vital role because they "exist for a fundamentally good reason." He added that AI will function as intelligent software that leverages these tools for us, ultimately enhancing productivity rather than replacing them. ALSO READ: Who is Raj Shamani's mystery guest tonight? Online buzz over 'first time ever on an Indian podcast' hint sparks frenzy. After Macron and Vijay Mallya, can you guess who's next? He stated, "In the end, we need the tools to finish their work and put the information back in a way that we can understand." This is not the first time Jensen has made such claims. Earlier this month he said that the notion of the software industry being replaced by AI was the "most illogical thing in the world, and time will prove itself." Jensen Huang's remarks come as Nvidia, the leading manufacturer of GPUs that power AI data centres, posted a 73% year-on-year surge in fourth-quarter FY25 revenue to $68.13 billion. The company's annual revenue reached $215.9 billion. Huang said, "Our customers are racing to invest in AI compute -- the factories powering the AI industrial revolution and their future growth." Looking ahead, Nvidia has forecast revenue of $78 billion for the first quarter of FY26. The company is currently the world's most valuable publicly traded firm, with a market capitalisation of $4.8 trillion. (You can now subscribe to our Economic Times WhatsApp channel)