Nvidia CEO Pushes Back on AI 'Software Apocalypse' Fears

Software stocks have cratered 23% this year on fears that AI will devour the industry. But Nvidia CEO Jensen Huang thinks the market has it backwards.

"I think the markets got it wrong," Huang declared Wednesday, hours after his chip giant posted another blockbuster earnings beat.

The Great Software Panic of 2025

Investors have been fleeing software stocks like ServiceNow, SAP, and Synopsys on fears that AI agents will make their products obsolete. The logic seems simple: why pay for expensive enterprise software when AI can do the work directly?

But Huang sees it differently. Instead of replacing software tools, he argues AI agents will become power users of them.

"These agentic AI will be intelligent software that uses these tools on our behalf and help us be more productive," Huang told CNBC's Becky Quick. He cited web browsers and Microsoft Excel as examples of tools that AI agents will leverage, not eliminate.

The counterintuitive argument: AI doesn't want to reinvent the wheel. It wants to spin existing wheels faster.

Numbers Don't Lie (Yet)

Nvidia's fourth-quarter results certainly back up the AI boom narrative. Revenue surged 73% to $68.13 billion, crushing estimates of $66.21 billion. First-quarter guidance of $78 billion smashed expectations of $72.6 billion.

Yet software stocks barely budged after Huang's reassuring words. Synopsys still dropped 3.6% in after-hours trading, while Cadence fell 0.9%. The market seems unconvinced.

Winners, Losers, and the Messy Middle

Not everyone buys Huang's optimism. Dan Niles of Niles Investment Management warned that "there's some real companies that are going to go to zero in the software space." He sees database and cybersecurity firms as the most likely survivors.

Meanwhile, CNBC's Jim Cramer pushed back against doomsday predictions: "The software companies are survivors. They can merge. They can adapt."

The truth likely lies somewhere between Huang's confidence and the market's panic. Some software companies will indeed become AI-enhanced tools. Others may find themselves obsolete.

The $2 Trillion Question

With AI hardware spending reaching astronomical levels, the sustainability question looms large. If AI agents truly become sophisticated tool users rather than tool replacers, it could justify continued massive investments in both hardware and software.

But if the market's fears prove correct, we might be witnessing one of the largest sectoral disruptions in tech history.