In order to support his prediction that the artificial intelligence boom will continue well into next year, Jensen Huang, CEO of Nvidia (NVDA.O), placed what may be the greatest single investment in the history of the computer industry.
On Wednesday, the company’s sales projection much above Wall Street’s forecasts, and it announced it will repurchase another $25 billion worth of its shares—a move most businesses make when their management believes the business is undervalued. However, Nvidia’s stock price has more than tripled this year and was on track to reach a record high following Wednesday’s news.
The output of its technology will increase into next year, according to Nvidia, dispelling concerns that some experts had expressed about how long the AI mania might persist. Nearly all computing resources used to run popular services like ChatGPT, a popular generative AI chatbot from OpenAI, are controlled by the corporation.
On a conference call with investors, Huang stated, “We have tremendous vision through the year and into next year, and we’re actively planning the next generation infrastructure with major (cloud computing firms) and data center builders.
A switch from conventional data centers built around central processors to those built around Nvidia’s potent chips, as well as the increasing use of content produced by AI systems in everything from legal contracts to marketing materials, according to Huang, are two factors driving this demand.
“These two fundamental trends are what’s behind everything that we’re seeing, and we’re about a quarter into it,” he said. “It’s hard to say how many quarters are ahead of us, but this fundamental shift is not going to end. This is not a one-quarter thing.”
Huang’s move to buy back stock when it is more expensive than it has ever been tops the bets that even other large tech companies are making on AI, but comes as its price-to-earnings multiple fell to about 43 from 60 after analysts upgraded their earnings estimates in May.