Nvidia CEO Jensen Huang gives a keynote speech at the Consumer Electronics Show on January 6, 2025 in Las Vegas, Nevada.
Patrick T. Fallon | AFP | Getty Images
Nvidia CEO Jensen Huang said in an interview Wednesday, hours after the semiconductor giant issued an upward sales forecast on strong demand for AI, that the market has miscalculated the threat of AI to software companies.
“I think the market got it wrong,” Huang said, pushing back on concerns that AI agents could cannibalize the enterprise software industry.
Instead, he expects a wide range of software companies to use agent AI to develop software and increase efficiency, a move he called “counterintuitive.”
“(Companies) are going to use agents to use these tools,” Huang told CNBC’s Becky Quick.
“What will likely happen is that agents will use the tool, rather than the agent replacing the tool. This is why you can also say that the agent is the user of the tool.”
He mentioned his internet browser, microsoftAn example of a tool used by an AI agent is Excel.
“All the tools we use today are cadence or Synopsis or ServiceNow or SAPthese tools basically exist for a good reason. These agent AIs become intelligent software that uses these tools on our behalf and helps us be more productive,” Huang added.
“No one can deliver a better service than ServiceNow. They’ll come up with agents that are very finely tuned and optimized for the work they’re using their tools for.”
“Ultimately, we need tools to get the work done and get the information back in a way that we can understand,” he says.
Nvidia’s fiscal fourth quarter revenue rose 73% year over year to $68.13 billion, beating analysts’ expectations for $66.21 billion.
The company announced an upbeat outlook for first-quarter sales of $78 billion plus or minus 2%, well above analysts’ expectations of $72.6 billion.
Investors were weary of the large increase in spending on AI hardware that may not be sustainable, raising concerns about a bubble forming in the sector.
The software service provider’s stock prices have plummeted in recent weeks. Analysts have warned that AI will “eat” software in the long term, but their views on the risks and the fundamentals behind the latest selloff appear to be divided.
“People need to remember that everything tends to be overbuilt, whether it’s railroads, canals, the Internet, etc., and you see who’s going to be the winner and who’s going to be the loser,” Dan Niles, founder and portfolio manager at Niles Investment Management, told CNBC after Huang’s interview.
Niles warned that not all companies will survive unscathed, as AI threatens to automate workflows, squeeze prices and lower barriers for new competitors to enter the market.
“There are actually some companies that go to zero in the software space,” Niles said. He added that the most resilient players will be in the database and cybersecurity sectors.
Nvidia shares rose as much as 2% in after-hours trading after the quarterly results were announced.
