Nvidia CEO Jensen Huang defended his decision to “rip the Band-Aid off” on the company’s gross margins as the chip giant continues to power some of the world’s most advanced artificial intelligence models.
The CEO addressed reports of potential 15% price hikes while touting the company’s job creation as Nvidia employs roughly 42,000 people worldwide.
“This quarter we decided that we would rip the Band-Aid off, reset expectations about our gross margins, and just explain to people that in fact, we have now absorbed the cost increases,” Huang said during an interview with “The Claman Countdown” that airs Thursday.
JENSEN HUANG SAYS AI WILL RESHAPE WORK LIKE THE INDUSTRIAL REVOLUTION AND THE US ‘SHOULD ABSOLUTELY LEAD’
“We have also repriced our products in the marketplace, and based on that, our margins are going to come down from 75%. But it will be between 72% and 73% next year,” he continued. “And so, we’ve now reset the expectations and removed this anxiety that everybody had about our gross margins.”
Huang’s comments follow Nvidia’s blowout earnings report after the close Wednesday, which helped ease investor concerns about whether the AI boom is slowing.
APPLE RAISES PRICES AS AI CHIP COSTS SURGE
The chip giant’s earnings beat Wall Street expectations for its fiscal second quarter, and it offered a strong revenue outlook for the next fiscal year, sending shares up 4%.
Nvidia, valued at roughly $5 trillion, expects revenue to surpass $96 billion in the second quarter of fiscal 2027.
AMERICA’S AI BOOM IS A JOBS OPPORTUNITY, NOT AN EXCUSE FOR UNIVERSAL BASIC INCOME
Huang, who co-founded the Santa Clara-based chip giant in 1993, touted Nvidia’s role in creating massive amounts of jobs in the tech industry, saying the chipmaker is “creating jobs everywhere.”
Out of Nvidia’s roughly 42,000 employees, 50% have a net worth exceeding $25 million, according to Yahoo Finance.
The CEO explained to anchor Liz Claman that while the AI boom is creating huge demand for Nvidia, allowing them to fuel job growth, there still aren’t enough skilled workers to keep up with demand.
“We’re creating more jobs than ever,” Huang said. “We’re creating jobs in chip plants, packaging plants, computer plants, and of course, all of these AI data centers.”
“There’s just not enough skilled labor around the world and surely not here in the United States to be able to support my entire demand. But we have enough support for the 70% that I’ve forecasted,” he added.
Watch Huang’s full interview on “The Claman Countdown” on Thursday at 3 p.m. ET.
Read the full article here