Jen-Hsun Huang admitted to the "no-win dilemma"! Even with strong performance, NVIDIA is criticized as a driver of the AI bubble.

NVIDIA is facing unprecedented scrutiny. As a global leader in AI infrastructure, the company's performance not only reflects its own situation but is also viewed as a barometer of the overall health of the AI industry. CEO Jen-Hsun Huang rarely acknowledged in an internal meeting that the company is facing a “no-win dilemma”: outstanding performance will be accused of fueling the AI bubble, while poor performance will be seen as evidence of the bubble bursting.

Jen-Hsun Huang admits to a no-win situation in internal meeting

During an internal meeting, Jen-Hsun Huang candidly stated that the market's expectations for NVIDIA have risen to a level that makes it difficult to succeed. He pointed out, “If we deliver a poor quarterly report, it will be evidence of the existence of the AI bubble. If we deliver an excellent quarterly report, we are fueling the AI bubble.” This statement reveals the unique dilemma NVIDIA currently faces; regardless of the company's performance, it is challenging to escape the shadow of the AI bubble controversy.

Jen-Hsun Huang also mentioned that the market sees NVIDIA as a key indicator of macroeconomic health, and there are even jokes online suggesting that the company's performance helps the U.S. avoid a recession. He humorously stated, “You must be worth a lot to lose $500 billion in just a few weeks.” This self-deprecating remark reveals the management's helplessness towards the market's excessive attention and unreasonable expectations.

The exposure of the content of this internal meeting is itself a noteworthy event. Typically, corporate executives discuss the challenges facing the company more candidly during internal meetings, and Jen-Hsun Huang's choice to publicly disclose this “no-win” dilemma may be an attempt to manage investor expectations through honest communication, thereby reducing the market's overreaction to each earnings report. However, whether this strategy is effective remains to be seen.

Jen-Hsun Huang's description of the “no-win dilemma” logic

Performance Outperformance Scenario: Strong revenue growth, guidance exceeds expectations → Market accusations boost AI bubble → Concerns over high valuations intensify → Stock price under pressure

Poor Performance Scenario: Revenue growth slows, guidance falls short of expectations → Seen as evidence of AI bubble bursting → Triggers panic selling → Stock price plummets

This kind of predicament is not uncommon among highly valued tech stocks, but NVIDIA's situation is even more extreme. As a core infrastructure provider in the AI era, the company is imbued with a symbolic significance that transcends its business role. Investors are not only assessing NVIDIA itself but are also using it to evaluate the authenticity and sustainability of the entire AI revolution. This overinterpretation causes every performance figure of the company to be scrutinized under a magnifying glass.

Revenue grew 62%, but the stock price evaporated by 500 billion dollars

NVIDIA's third-quarter financial report shows that the company's revenue increased by 62% year-on-year, and the guidance for this quarter exceeded expectations again. However, the market reaction has been volatile, and the company's market value has evaporated by about $500 billion in a few weeks. This indicates that investors still have concerns about the sustainability of the AI investment boom.

A 62% revenue growth is extremely rare among mature technology companies. Such growth rates typically only occur in rapidly expanding startups, and Nvidia, as a giant company with a market value that once exceeded $3 trillion, is able to maintain such a high growth rate, demonstrating that the demand for AI infrastructure is indeed strong. The explosive growth of the data center business primarily comes from large-scale purchases of H100 and H200 GPUs by tech giants like OpenAI, Microsoft, Google, and Meta.

However, the strong performance data did not stabilize the stock price. The increase on Wednesday lasted only a day, and on Thursday, market sentiment quickly reversed, with the stock price closing down over 3%. This rapid shift in sentiment shows that while investors acknowledge NVIDIA's performance, there are profound concerns regarding its valuation levels and the sustainability of future growth. Currently, NVIDIA's price-to-earnings ratio remains at a historical high, and even with a growth rate of 62%, whether the valuation is reasonable remains a topic of controversy.

The market value evaporated by about 500 billion dollars within a few weeks, and this figure is shocking in itself. 500 billion dollars is equivalent to the full market value of a large multinational corporation and exceeds the annual GDP of many countries. Such a massive evaporation of market value reflects not only Nvidia's problems but also the concentrated embodiment of concerns about the entire tech sector and the AI bubble. When the market begins to question the return on investment and sustainability of AI, Nvidia, as an upstream player in the industry chain, naturally bears the brunt.

AI Bubble Controversy: Nvidia Becomes a Macroeconomic Indicator

Jen-Hsun Huang also mentioned that the market views Nvidia as a key indicator of macroeconomic health, and there are even anecdotes online suggesting that the company's performance helps the US avoid an economic recession. Although this argument is exaggerated, it is not entirely unfounded. The demand for Nvidia's AI chips comes from the capital expenditures of global tech giants, and these expenditures often amount to hundreds of billions of dollars, which indeed contribute significantly to GDP growth.

However, the notion that “NVIDIA supports the US economy” itself reflects concerns about the AI bubble. When a company's performance is believed to influence the economic trends of an entire nation, such expectations are excessive in themselves. Even more concerning is whether a downturn in NVIDIA's performance would trigger a chain reaction, affecting the capital expenditure plans of tech giants, thereby impacting the overall economy.

The core controversy of the AI bubble lies in the uncertainty of investment returns. Tech giants have poured hundreds of billions of dollars into AI infrastructure, purchasing NVIDIA's GPUs to train large language models and deploy AI applications. However, when these investments will yield corresponding revenue and profit returns remains unknown. Although OpenAI launched ChatGPT and gained significant attention, its commercialization path and profitability are still under validation.

The market's doubts about NVIDIA are essentially doubts about the investment logic of the entire AI industry chain. If downstream applications cannot generate sufficient revenue to justify the enormous capital expenditures, then upstream NVIDIA will also be affected. This interconnected logic of the industry chain means that NVIDIA not only has to be accountable for its own performance but also has to endorse the health of the entire AI industry. This is the deep-rooted reason for what Jen-Hsun Huang refers to as the “no-win dilemma.”

Investor Confidence Wavers and Overvaluation Risks

NVIDIA's stock price has recently experienced significant fluctuations, indicating market concerns over the risks of an AI bubble. Its market value has evaporated by about $500 billion in just a few weeks. Despite the company's strong performance, investors remain cautious about sustainable growth. This volatility reflects investors' uncertainty regarding the high valuations of tech stocks and doubts about the sustainability of the AI boom.

NVIDIA's current valuation level remains at a historic high. Even considering the 62% revenue growth, the market is still debating whether this valuation is reasonable. Optimists believe that the AI revolution has just begun, and as an infrastructure provider, NVIDIA will benefit in the long term, with the current valuation reflecting the growth potential for the coming years. Pessimists warn that the current AI investment frenzy is similar to the internet bubble of 2000, and once the market realizes that investment returns are not as expected, valuations will face severe corrections.

Jen-Hsun Huang's public statement not only reflects the management's awareness of market pressures but also reminds investors to pay attention to the medium- to long-term risks and opportunities associated with the development of the AI industry and the execution of the company's strategy. This kind of open communication strategy may not stabilize the stock price immediately in the short term but helps to establish more rational market expectations. Investors need to recognize that while NVIDIA is an excellent company, it is not omnipotent; placing macroeconomic expectations on a single enterprise is inherently unreasonable.

NVIDIA is currently facing a “no-win dilemma”; even with excellent financial report data, it is difficult to eliminate market concerns about an AI bubble. This situation reflects the contradiction between the high valuation of tech stocks and their actual performance amid market enthusiasm, while also showing that investors are extremely sensitive to expectations of continued growth. In the coming quarters, whether NVIDIA can maintain high growth and gradually prove the returns on AI investments will be key to determining stock price trends and the controversy surrounding the AI bubble.