Nvidia CEO Jensen Huang on Wednesday defended his company’s growing role in funding the artificial intelligence boom, pushing back against criticism that its financial support for other AI companies is aimed at inflating sales growth.
“I think they’re missing a very big point,” Huang told CNBC’s “Mad Money” shortly after the company announced better-than-expected quarterly results.
“This is the first generation of startups that needed tens of billions of dollars to get funded,” Huang continued. “When was the last time you heard of a startup that needed billions of dollars to get off the ground and tens of billions of dollars to get profitable? That never happened. But that’s just the nature of AI. The cost of building AI, the cost of deploying AI, it’s very capital intensive.”
Nvidia has become cash-rich with the AI boom thanks to its position as a leading maker of chips needed to power the large language models behind OpenAI’s ChatGPT and other similar applications. The company has used its windfall to invest in a number of companies across the AI ecosystem, from model makers like OpenAI and Anthropic to neocloud providers that rent Nvidia-powered computing power to customers.
But Nvidia has increasingly leveraged its balance sheet strength to provide financial backstops for data center projects, including a $105 billion investment in a massive computing campus being built in Ohio where OpenAI will be a tenant. Nvidia recently announced that it would partner with some of Wall Street’s largest firms to arrange up to $500 billion in financing for data centers.
In particular, a series of recent deals have raised concerns about Nvidia’s financial support for the AI ecosystem. Critics say the aid increasingly looks like “cyclical lending” and compares it to the ill-fated lending system of the dot-com bubble. So-called circular trading, in which companies provide loans to customers who then use some of the funds to buy their products, has raised questions about whether the arrangements artificially support demand and sales.
In an interview with CNBC’s Jim Cramer, Huang argued that these deals reflect the unprecedented amount of capital needed to build cutting-edge AI companies. The CEO said NVIDIA wants to make equity investments in these leading AI companies while also providing broader support as needed.
“There are some once-in-a-generation companies, such as Frontier AI Labs, and we want to invest in them. We want to support them. We want to be their partner. Of course, we want them to build their ecosystem on top of us and then scale their business with us. So the opportunity to invest in them first was a great opportunity.”
At the same time, Huang said these companies do not have the financial position to borrow the additional funds needed to secure the compute at this stage of building AI. “They’re not investment grade. They don’t have the track record, the capital track record, the financial track record to be able to acquire or secure capital at a low cost. And this is where Nvidia can help,” Huang said.
Mr. Huang also pushed back against concerns that Nvidia could be in trouble if any of those companies struggle. He argued that the company’s computing infrastructure can be redeployed across different customers and workloads, limiting its exposure to a single investment.
“The money we invest will yield huge returns,” he added. “I think the risk is low.”
Nvidia’s latest financial results on Wednesday strengthened Huang’s confidence in potential demand. The company reported quarterly revenue of $96.2 billion in the second quarter of 2027, more than double the same period last year, with data center revenue increasing 117% to $89 billion. Nvidia also expects revenue to increase by about 70% in fiscal 2028.
Nvidia’s stock price rose about 4% in after-hours trading following the results. The stock has risen just 12% since the beginning of the year, reflecting widespread investor concerns about AI trading.
