Why Nvidia's Jensen Huang thinks the market got it wrong on software companies

By Steve Goldstein

Jensen Huang says the market has it wrong on software.

There's at least one executive in the artificial intelligence space who doesn't think AI will cannibalize software companies: Nvidia's Jensen Huang.

"I think the markets got it wrong," Huang told CNBC after Nvidia's (NVDA) fourth-quarter results.

His point is that the AI tools will actually use software - mentioning ServiceNow (NOW) as an example - just as humans do now, except more frequently.

Software also will be needed to present what AI has computed in a way that people can understand, he said.

Another point he made, on the conference call with analysts, is that software will actually be a big end-user of AI.

"And fundamentally, because every single company depends on software, every software will depend on AI, and so every company will produce tokens, and that's the reason why I call them AI factories," Huang said, according to a transcript from S&P Global Market Intelligence.

That argument to date has fallen on deaf ears. The iShares Expanded Tech-Software Sector ETF IGV has lost a quarter of its value this year, and four members of that group have dropped at least 50%.

This year's price-to-earnings ratio for the IGV is down to 20, lower than the 22 enjoyed by the broader S&P 500.

-Steve Goldstein

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02-26-26 0359ET