Nvidia CEO Rejects AI Bubble Fears as Reliance on Key Customers Raises Risks

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Nvidia CEO Jensen Huang says he does not see an artificial intelligence bubble; instead, he calls the current moment a tipping point as demand for the company’s chips spreads across industries, from software development to robotics, Reuters reported. Nvidia’s stock rose over 5% in the early trading hours on Nov. 20.

On Nov. 19, Nvidia posted quarterly results and forecasts that exceeded expectations, easing near-term concerns. But longer-term questions persist about Nvidia’s exposure to factors beyond its control as it becomes the world’s most valuable listed company at more than $4.5 trillion.

In a regulatory filing, Nvidia said most of its business depends on four unnamed customers who accounted for 61% of its $57 billion in third-quarter revenue, up from 56% in the second quarter. Past disclosures suggest they could include Microsoft, Meta, and Oracle.

Nvidia also doubled spending on renting its own chips back from cloud providers, reaching $26 billion, up from $12.6 billion last quarter, with commitments running through at least 2031. It has said it would invest up to $100 billion in OpenAI and $10 billion in Anthropic.

The tight customer dependence and circular nature of some deals have created concern, especially as major AI players have yet to post significant profits. “A lot of this growth is coming from loss-making startups or loss-making projects,” said Chaim Siegel of Elazar Advisors.

Huang dismissed bubble fears during the earnings call, saying Nvidia has a “very different” perspective because of the shift of non-AI software to accelerated computing. He also acknowledged challenges in securing land, power, and data center capacity but noted, “None of these things are easy, but they're all tractable.”

However, competition from in-house chips at Alphabet and Amazon could affect Nvidia’s goals. “The list of things that could go wrong for Nvidia is longer than the list of things that could go right,” said Jay Goldberg of Seaport Research Partners.