Nvidia CEO Jensen Huang says markets misjudged AI’s Impact on software firms

Nvidia CEO Jensen Huang has pushed back against fears that AI agents will disrupt or replace enterprise software companies, arguing instead that AI will strengthen demand for software tools and improve productivity across industries.

Nvidia CEO Jensen Huang said markets have misunderstood the impact of artificial intelligence on enterprise software companies, countering investor concerns that AI agents could cannibalize the software industry.

Speaking to CNBC after Nvidia delivered stronger-than-expected earnings and guidance, Huang said fears around AI replacing software tools are misplaced.

“I think the markets got it wrong,” Huang said, responding to worries that agentic AI would undermine traditional software businesses. Instead, he argued that AI agents will rely on existing software tools even more, helping users work faster and more efficiently.

Huang described this dynamic as “counterintuitive,” explaining that AI agents are designed to be “tool users” rather than replacements. He cited everyday examples such as web browsers and Microsoft Excel, noting that AI systems will increasingly operate these tools on behalf of users.

According to Huang, enterprise platforms from companies like Cadence, Synopsys, ServiceNow, and SAP exist for solid reasons and will remain essential. AI agents, he said, will be intelligent layers that use these tools to complete tasks, return insights, and improve productivity rather than eliminate the need for software altogether.

He added that leading software providers are best positioned to develop specialized AI agents tailored to their platforms, reinforcing their competitive advantage rather than eroding it.

Huang’s remarks followed Nvidia’s strong quarterly performance. The company reported a 73% year-on-year jump in fiscal fourth-quarter revenue to $68.13 billion, beating analyst expectations. Nvidia also issued an upbeat forecast for fiscal first-quarter revenue of about $78 billion, well above market estimates.

Despite Nvidia’s optimism, software stocks have faced heavy selling in recent months as investors questioned whether the surge in AI hardware spending is sustainable. Some analysts fear AI could automate workflows, compress pricing, and lower entry barriers for new competitors.

Market reactions after Huang’s comments were mixed. Shares of Synopsys and Cadence fell modestly in after-hours trading, while ServiceNow was largely flat and SAP edged slightly higher.

Industry observers remain divided. While some warn that not all software companies will survive the AI transition, others argue the sector has historically adapted to major technological shifts. CNBC’s Jim Cramer dismissed extreme pessimism, suggesting software companies are capable of evolving through mergers, innovation, and business model changes—though he cautioned that valuations remain demanding.

Overall, Huang’s message was clear: AI is not here to replace software, but to amplify its value—an outlook that challenges prevailing market fears and reframes the future of enterprise technology.