Is the world’s hottest company losing its mojo?

On DeepSeek, Huang praised the company’s R1 model but said its implications had been misunderstood by the market. A reasoning model of its type will actually require much more computing power to use than older models, despite claims that less energy had gone into its training, he said, which means higher demand for Nvidia chips and not lower.

The industry needs “100 times more [AI computing power] than we thought we needed this time last year”, he said, and indeed expenditure at data centres is climbing faster than analysts have expected, for now.

On tariffs, he said the impact would be small and short-term, as Nvidia was moving its most important manufacturing to the US. In fact, some analysts think the tariffs could end up becoming a competitive benefit.

“Current US semiconductor export restrictions put an absolute ceiling on AI compute [for China], at a degraded Hopper level,” said Richard Clode, portfolio manager at Janus Henderson.

“Over the next few years, new Chinese AI models will be constrained by that compute ceiling, while globally AI models are likely to be training on exponentially higher-performance AI infrastructure.”

But despite it all, it’s impossible to ignore how differently received this year’s Nvidia announcements were compared to those of the previous two years, when hype around AI applications was massively accelerating. Huang merely mentioning Dell at the 2024 GTC led to a rally in that company’s value, whereas an announcement this year about supplying chips to General Motors didn’t seem to move the needle for the automaker.

In previous announcements, Huang painted a picture of massive economic and social benefits that would be achieved through AI, but despite huge investments and many announcements from OpenAI, Amazon, Google, Microsoft and others, those just don’t seem to even be on the horizon.

In essence, Nvidia’s chips remain the new oil or gold in this world for the tech ecosystem, as there is only one chip in the world fuelling this AI foundation, and it is Nvidia.

Wedbush analyst Dan Ives

Now Huang is saying industry needs to invest more and that a wider pool of industries needs to get behind the technology to see benefits.

Nvidia is down more than 10 per cent from the January peak, erasing more than $1 trillion in market value. So, was ill-founded AI hype pumping up the stock, meaning Nvidia will return to a stable value based on its still-formidable chips, or is it set to see a rebound as fears around competition and trade wars subside?

“The market is very sceptical on the stock,” said Alec Young, chief investment strategist at Mapsignals, as reported by Bloomberg. Nvidia’s current valuation, coupled with its high expected topline growth, is a sign that the “market thinks the growth’s not going to happen”, he said.

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Yet demand for the Blackwell chip is ramping up, and no viable competitor appears to be forthcoming. A Blackwell Ultra chip will launch later this year, offering the same 20 petaflops of AI performance but with around 50 per cent more memory. Then next year the company will switch to a new architecture called Rubin, with a full stack that should provide 3.3 times the performance of Blackwell.

These are designed to be used in clusters as part of big data centres, but for smaller operations Nvidia has also introduced desktop PCs with Blackwell chips inside, starting at around $5000.

“In essence, Nvidia’s chips remain the new oil or gold in this world for the tech ecosystem, as there is only one chip in the world fuelling this AI foundation, and it is Nvidia,” said Wedbush analyst Dan Ives.

“This is now about the ripple impact for tech. We estimate for every $1 spent on an Nvidia chip there is a $8 to $10 multiplier across the tech ecosystem with the hyperscalers, software, data centre buildouts, cybersecurity, and energy demand all benefiting from this $2 trillion of AI CapEx set to take place over the next three years.”

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