Jensen Huang: AI compute demand is extremely strong, but capital shortage constrains "neocloud" expansion

Cailian Press Financial News Agency

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Cailian Press Niu Zhanlin, Editor He Jun 2026-10-22 19:55

① Market demand for "neocloud" computing power is extremely strong, but a shortage of capital is constraining the industry's growth; ② Jensen Huang pointed out: "What's missing in the middle right now is the working capital needed to drive the growth of these companies... because demand is extremely strong across all areas of artificial intelligence (AI), there is a shortage of capital."

Cailian Press, October 22 (Editor Niu Zhanlin) Nvidia CEO Jensen Huang said on Thursday that market demand for "neocloud" computing power is extremely strong, but a shortage of capital is constraining the industry's growth.

Speaking in Berlin on the same day during Nvidia's GTC conference, Huang said: "If you look at the fundamentals, market demand for computing power from new cloud service providers is extremely strong." He also noted that these companies' capabilities are extraordinary. Neoclouds are a new type of cloud computing company that buy large numbers of servers equipped with AI chips and then lease the computing power to AI companies.

Power supply is one of the main bottlenecks constraining the development of the AI boom, especially in Europe, where electricity prices are higher. Huang said that with Europe's energy supply already tight, how to allocate limited energy to neocloud companies such as Nebius and Mistral is crucial to their development.

Huang explained: "You can bring investment into Europe, but first you must have your own infrastructure. If Europe's neoclouds can build infrastructure locally, they can develop an AI ecosystem and AI economy on that foundation; then the growth flywheel of the AI economy will start spinning in Europe and ultimately form a complete closed loop in Europe."

He added: "All of Europe needs more neoclouds."

Neoclouds under pressure

Recently, shares of neoclouds such as CoreWeave and Nebius have continued to fall. As the market grows increasingly worried about companies' massive spending on AI infrastructure, investors are beginning to fear that the payback period for related investments will be longer than expected.

Investors are also concerned about the scale of CoreWeave's debt financing. As one of the largest neoclouds, the company is using large amounts of debt to fund data center construction.

In premarket trading on Thursday, the neocloud sector continued to decline, with Nebius down 3% and IREN and CoreWeave down 4%.

If neoclouds run into operational difficulties, Nvidia will also face a double blow: on the one hand, chip sales may decline; on the other hand, the financial support it previously provided may also suffer losses. The related risks could also spread along the AI industry chain and hit the global AI ecosystem.

This month, as Nvidia seeks to increase investment in Europe's AI industry, Huang has been conducting an intensive European media campaign. Nvidia has pledged to invest nearly $10 billion in European companies, universities and research institutions.

During a visit to London last week, Nvidia announced equity investments totaling more than $1 billion in five British startups. The chip giant is also investing in several French startups.

Huang said: "We are working hard to get Europe's AI economy off the ground. Europe has a great deal of advanced technology, rich industrial knowledge and experience, and outstanding scientific and technological strength. Europe is ready to participate in building and developing the AI economy here."

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Cailian Press disclaimer: The content of this article is for reference only and does not constitute investment advice. Investors who act on it do so at their own risk.

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