Nvidia CEO Jensen Huang said AI cloud providers face a shortage of capital rather than customers.
Alex Kraus/Bloomberg via Getty Images
Jensen Huang defended demand for neocloud services as concerns grow about debt in the sector.
“The demand for the neoclouds is off the charts,” Nvidia CEO Huang said in a CNBC interview.
Shares in CoreWeave, one of the biggest neocloud players, have dropped 50% over six months.
Nvidia CEO Jensen Huang says demand for AI cloud infrastructure is “off the charts,” even as investors grow increasingly nervous about the industry’s debt-fueled expansion .
Speaking in an interview on CNBC’s “Morning Call” on Thursday, Huang pushed back against concerns about the business models of so-called neoclouds, companies that provide specialized computing infrastructure for artificial intelligence.
“The demand for the neoclouds is off the charts,” Huang said. “Their capabilities are extraordinary.”
His comments came as CoreWeave, one of the largest publicly traded neoclouds , faces heavy scrutiny over its finances. Analysts from both HSBC and Bernstein have issued negative research notes on CoreWeave in recent days.
Its stock has dropped 50% over the past six months, and was down as much as 4% in premarket trading on Thursday. HSBC said this week it sees CoreWeave’s stock price dropping another 35% or more.
Investors have grown increasingly concerned about the debt financing the AI boom, as companies borrow heavily to build data centers and acquire chips.
Rising bond yields are adding to financing costs, while interconnected investments between AI companies have raised fears of a bubble.
Futures in the tech-focused Nasdaq were under pressure on Thursday, dropping 1.7%.
A risky AI bet?
CoreWeave has become a focal point of concerns about the AI trade, having taken on substantial debt — $35.6 billion as of June, per its regulatory filings — to finance its rapid expansion.
Nvidia, which invested another $2 billion in CoreWeave in January, is both a major investor in and supplier to CoreWeave, highlighting the close financial ties that underpin parts of the AI industry.
Huang did not mention CoreWeave by name on Thursday, but argued that the broader sector’s biggest challenge was access to capital, rather than demand.
“Because there’s just so much demand across so many sectors of AI, there’s a scarcity of capital,” Huang said.
“That’s going to get solved,” he added.
Huang specifically defended CoreWeave last week, telling Bloomberg that its “strength is improving every day.”
“I’m optimistic. Their cost of capital is actually decreasing,” he said.
On Thursday, Huang also said Nvidia was working to establish its computing hardware as a financeable asset , arguing that its durability and productivity could help unlock more lending to neocloud companies.
“It is now becoming an asset class,” he said.
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