Nvidia CEO Jensen Huang told CNBC on Thursday that demand for neocloud companies is “unexpected,” but a lack of capital is hampering growth.
“If you look at the fundamentals, the demand for NeoCloud is extraordinary,” Huang told CNBC’s Arjun Karpal on the sidelines of the company’s GTC conference in Berlin on Thursday, adding that its capabilities are “extraordinary.”
“What’s missing in the middle is working capital to fuel that growth… There’s so much demand in so many areas of AI that there’s a scarcity of capital,” Huang said.
“The demand for capital far exceeds the availability of capital. That will be resolved,” he added.
Electricity is a major constraint for the AI boom, especially in Europe where electricity prices are high. Mr. Huang said it was important for the region to allocate scarce energy to companies such as: Nevius And Mistral is crucial to their growth.
“We can bring investment to Europe, but we have to start by building our own infrastructure,” Huang explained. “If the European neocloud can establish an infrastructure here, we can build an AI ecosystem, an AI economy on top of that. And the flywheel of the AI economy starts and ends in Europe.”
He added: “We’re going to need more neoclouds across Europe.”
Neocloud under pressure
Neocloud stocks etc. coreweave Nevius and Nevius have been selling off recently amid growing concerns about how much companies are spending building AI infrastructure and concerns that the return on investment is likely to take longer than expected.
Investors are also wary of how much debt neocloud giant Coreweave is using to finance data center construction.
NeoCloud shares fell in premarket trading Thursday, with Nevius down 3.6% and Coreweave down 4%. Airen and applied digital also decreased by nearly 4%.
Huang has come under fire from European media this month as the semiconductor giant seeks to increase investment in the region’s AI sector. The company has committed nearly $10 billion to businesses, universities and research institutions.
During a visit to London last week, NVIDIA announced that it had acquired stakes worth more than $1 billion in five British startups. The semiconductor giant has also invested in various startups in France.
“We are trying to revitalize the AI economy in Europe,” Huang told CNBC. “Europe has a huge amount of technology, a huge amount of industrial know-how, incredible science and technology, ready to enter and build the AI economy here.”
