Jensen Huang has so far been the central figure in the trillion-dollar AI boom. Not just because Nvidia provided the necessary technology. Huang also made the company the "central bank" of the massive investment cycle.
Nvidia's chips are central to the global boom in artificial intelligence, but the company's capital is even more central. Investments by major technology companies, AI developers and data center operators worldwide are expected to reach the trillion dollar threshold this year. A large part of the investments that have allowed the stock markets to continue to grow despite multiple crises in recent years went into the expansion of AI and the associated infrastructure. As probably the most important player who pumped hundreds of billions of dollars into this investment boom, Nvidia is also referred to as the “central bank of artificial intelligence”.
This financial commitment from Nvidia, even more than the development of the AI chips, can be traced back to the initiative of the company's founder and boss Jensen Huang, who has now resigned. Replacing him in this role as the driving force behind the investment boom could be more difficult than finding a suitable successor to the executive board. With his personal network, which Huang maintains not only within the AI industry, but also with the bosses of major banks and financial institutions, he is probably the most important architect of this boom, even beyond Nvidia's own investments.
Nvidia provides billions of dollars in capital to customers such as AI developers OpenAI and Anthropic as well as data center operators - in the form of loans, investments or guarantees. In this way, Nvidia enables these largely young, loss-making companies to grow faster than would be possible if they had to finance themselves on the capital market. Most of the money flows back directly to Nvidia, because the expensive and highly sought-after special chips are the largest cost item in expanding the AI infrastructure.
Confidence in Huang kept investments flowing
It is estimated that Nvidia has made commitments of over $400 billion. It is generally not unusual for large companies to help their own customers with financing. Other tech companies have also invested large sums in AI companies with the aim of not missing out on the boom and stimulating demand for their own products and services. What worries observers about the investment boom, in addition to the enormous sums, is that it is still unclear whether and how AI models like Claude and ChatGPT will generate profits in the future that will refinance these investments.
The US Federal Reserve Bank and the International Monetary Fund, among others, have already addressed the risk that the AI investment cycle could stall. Not only private investors, but also banks and funds that have recently invested hundreds of billions in technology companies for AI expansion through bonds, among other things, are threatened with painful losses in this case.
The weakest link in this financial chain could be the so-called neoclouds. Compared to giants like Amazon or Alphabet, these are smaller companies that are currently setting up large data centers specifically for AI applications in many places in the USA. Many of these companies are heavily indebted, including Nvidia.
Jensen Huang has personally played an important role in maintaining the trust of everyone involved in this cycle and keeping the investments going. For example, when doubts arose in recent months about the financial reliability of the neocloud company CoreWeave and its share price plummeted, the Nvidia boss personally stood in front of the company in question. Following its public assurance that CoreWeave's financial position was improving, its share price rose by around six percent in just one day.
So far, there are no signs that the AI boom will come to an abrupt end due to Jensen Huang's departure. However, without its current “central banker”, the industry is likely to lack a driving force in the long term.
