Nvidia (NVDA 3.18%) has been the artificial intelligence (AI) leader in hardware. Its software and AI architecture platforms have also kept it ahead of its peers. A potential disruptor has now raised concerns about the investment thesis.
That caused Nvidia stock to plunge as much as 5% today, and it remained lower by 2.8% as of 2:41 p.m. ET. But CEO Jensen Huang says investors should reconsider dumping AI-related stocks.
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Is the new AI tool an existential threat?
A downturn in tech stocks was sparked when privately held AI company Anthropic introduced a new tool for its Claude large language model (LLM). The plugin tool is intended to handle tasks in data analysis applications and in legal, sales, and marketing use cases.
Shares in software stocks plunged as investors feared much of that industry could be replaced by AI tools that companies didn't need to pay extra for. The tumble began taking down tech giants like Nvidia today as well.
Nvidia CEO Jensen Huang responded, though, by dismissing much of that thinking. Huang spoke at an AI conference in San Francisco and said it was "illogical" to think that AI will replace software tools.
NASDAQ: NVDA
Key Data Points
Huang said the latest breakthroughs in AI are all about utilizing tools. He stated, "There's this notion that the tool in the software industry is in decline, and will be replaced by AI." He added that in time, investors will find that not to be true.
Investors who believe in Nvidia and Jensen Huang might find today's sell-off a good opportunity to buy shares.
