Nvidia shares rise as CEO Jensen Huang tries to address key investor concerns

• Shares of Nvidia rose 6% on Wednesday, helping a rally in the technology-driven stock market.

• CEO Jensen Huang discussed the ROI of AI infrastructure at a Goldman Sachs conference.

• Productivity gains and immediate cost savings are the core principles of Nvidia’s ROI proposition to customers.

Shares in Nvidia rose 6% on Wednesday, helping a tech rebound in the broader market after the CPI report failed to excite the market about impending interest rate cuts.

The gains in Nvidia stock came as CEO Jensen Huang addressed investors at a Goldman Sachs conference in San Francisco on Wednesday morning.

Speaking with Goldman Sachs CEO David Solomon, Huang answered key questions related to the continued development of AI infrastructure, including whether the return on investment has been worth it for his clients.

“How would you rate customer ROI at this point in the cycle?” Solomon asked.

Huang noted that because efficiency gains in processors had all but stopped, effectively ending Moore’s Law, the cost of data computations was poised to rise in a world creating exponentially more data.

But Nvidia’s GPU-based accelerators have meant massive gains in power and efficiency in processing data calculations, leading to immediate savings for its customers.

In other words, in a world where Nvidia GPUs with AI didn’t exist, data centers would cost a lot more money due to the slow nature of the processors.

“You reduce the computation time by about 20 times, and so you get a 10-fold savings,” Huang said of running Nvidia’s GPU accelerators compared to traditional CPUs.

He added: “That’s the instant return on investment you get from acceleration.”

While Nvidia’s high-end GPU racks for data centers cost millions of dollars, Huang said the cost pales in comparison to material costs for a setup built around CPUs.

“Nvidia server racks look expensive and might be several million dollars per rack, but they replace thousands of nodes. The amazing thing is just that the cables connecting the old general purpose computing systems cost more than replacing all of them and identifying them in one support,” explained Huang.

In the Gen AI world, where there are popular consumer products like ChatGPT and Claude, Huang said the ROI for his customers is strong.

“The return on this is fantastic because the demand is so high that for every dollar they spend with us it translates into $5 worth of rents. And this is happening all over the world and everything is sold out,” Huang said.

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Finally, Huang noted that investors need to consider the productivity gains that are unlocked through Nvidia’s GPU systems.

“The productivity gains are just incredible,” Huang said. “There isn’t a software engineer in our company today who doesn’t use co-generators.”

He added: “And I think the days where every line of code was written by software engineers are completely over.”

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