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Jensen Huang faces a monumental task as he takes center stage at a Goldman Sachs event on Wednesday: getting AI investors to stop panicking.
The billionaire Nvidia CEO is set to speak at the investment bank's Communacopia and Technology Conference in San Francisco at a time when investors are starting to feel increasingly uncertain about the hype surrounding AI.
"He does have to step up here, I think," Chris Beauchamp, chief market analyst at financial services firm IG, told Business Insider ahead of Huang's appearance scheduled for 7:20 am local time.
Of course, Nvidia has enjoyed relentless growth since the start of the generative AI boom sparked by the release of ChatGPT almost two years ago.
Nvidia experienced a near 800% growth in market capitalization from January 2023 to its $3.24 trillion valuation peak in June as companies such as Amazon, Google, Meta, Microsoft, and OpenAI all lined up to buy its chips — known as GPUs — needed to build powerful AI models.
The company has also been a huge driver of the S&P 500 this year, which has climbed by almost 16% since January.
However, there are signs suggesting that investors are getting pretty angsty over the future of Nvidia and AI more broadly. The latest indication came after the Santa Clara-based company reported earnings at the end of August.
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Despite the chip giant reporting a record $30 billion in revenue in its last quarter — up 122% year-on-year — its shares fell by almost $200 billion immediately after Huang's earnings call with investors.
Days later, on September 3, the company suffered a historic $279 billion loss in market value, the single biggest one-day decline experienced by a US company ever. Given the record revenue results, it's worth asking why.
First, Nvidia's 122% year-on-year revenue growth in the last quarter was smaller than the 262% growth it recorded in the previous quarter. It got investors wondering if growth might be slowing down.
As Beauchamp noted, one of the worries among investors from the latest results was that "they can't sustain momentum or meet demand."
Questions over momentum have grown as Nvidia's small base of Big Tech customers, such as Google and Microsoft, spent the summer telling the market not to expect returns any time soon from their massive capital expenditure on expensive AI hardware and infrastructure.
An estimate from analysts at investment bank Bernstein earlier this year suggested that capital expenditure on AI, including spending on GPUs from Nvidia, could exceed $1 trillion in the next five years.
The concerns over returns have created a more anxious sentiment in the market, with investors questioning if they should be as willing to buy into the hype as they once were. "That might change again, but for the moment, people are fairly skeptical," Beauchamp said.
On the question of whether Nvidia can "meet demand," concerns have risen over delays in the rollout of the company's latest Blackwell GPU.
As my colleague Emma Cosgrove wrote in August, the processor, which was first announced in March, has faced issues in "reaching high production volume," per details from analysts at industry research firm Semianalysis.
As Huang takes the stage on Wednesday, investors will want details on the status of Blackwell. Whether that will address fears is uncertain for Alvin Nguyen, senior analyst at research firm Forrester.
"I do not believe that Jensen is able to say anything that will quell investors' nerves," he said. "Nvidia is the face of generative AI and that means that they are getting outsized reactions from anything good and bad."
Huang's task is unenviable.
