NVIDIA CEO Jensen Huang said demand for AI cloud infrastructure is "insanely high," even as investors grow increasingly concerned about the industry's debt-driven expansion.
On Thursday, during an interview on CNBC’s “Morning Call,” Jensen Huang addressed concerns surrounding the business model of so-called neoclouds—companies that provide specialized computing infrastructure for artificial intelligence.
Jensen Huang said: "Demand for neoclouds is extraordinarily high. Their capabilities are extraordinary."
His remarks come as CoreWeave, one of the largest publicly traded neoclouds, faces intense scrutiny over its financial condition. In recent days, analysts from HSBC and Bernstein have both released bearish research reports on CoreWeave.
The stock has fallen 50% over the past six months and dropped as much as 4% in pre-market trading on Thursday. HSBC stated this week that it expects CoreWeave’s stock to decline a further 35% or more.
As companies take on significant debt to build data centers and purchase chips, investors are growing increasingly concerned about the debt financing underpinning the AI boom.
Rising bond yields are also increasing financing costs, while interconnected investments among AI companies are intensifying market concerns about a bubble.
On Thursday, Nasdaq futures, led by technology stocks, declined 1.7%.
CoreWeave has become the focus of market concerns regarding AI trading. According to its regulatory filings, as of June, the company carried $35.6 billion in significant debt to finance its rapid expansion.
NVIDIA invested another $2 billion in CoreWeave in January. As both a major investor and supplier to CoreWeave, NVIDIA highlights the close financial ties underpinning parts of the AI industry.
Jensen Huang did not mention CoreWeave by name on Thursday, but he believes the industry's biggest challenge is access to capital, not demand.
Huang Renxun said: "Because there is such strong demand across many areas of AI, capital has become scarce."
“This issue will be resolved,” he added.
Last week, Huang Renxun clearly defended CoreWeave, telling Bloomberg that the company's "strength is improving every day."
He said, "I am optimistic. Their cost of capital is actually decreasing."
On Thursday, Huang also said that NVIDIA is working to make its computing hardware a financiable asset, noting that its durability and productivity help neocloud companies secure more loans.
He said, "It is now becoming an asset class."