Jensen Huang Says Markets Miscalculated AI Threat to Software Firms After Nvidia Posts Q4 Beat

Nvidia reported a fiscal Q4 beat and better-than-expected Q1 revenue guidance amid robust demand for AI.

Quarterly revenue soared 73% year-over-year to $68.13 billion, calming fears that higher spending on AI hardware might not be sustainable.

Despite the better-than-expected financial results, global memory shortage remains a concern for investors, and Nvidia expects supply chain headwinds in Q1 fiscal 2027 and beyond. However, Nvidia CEO Jensen Huang said that the markets got it wrong about the AI threat to the enterprise software industry.

He explained that diverse software firms will start using agentic AI for innovation and enhanced operational efficiency, and AI agents won't replace software tools but will use them.

'I think the markets got it wrong.. Agents are tool users. All of these tools that we use today, whether it's Cadence or Synopsys or ServiceNow or SAP, these tools exist for a fundamentally good reason. These agentic AI will be intelligent software that uses these tools on our behalf and help us be more productive,' Huang explained.

'Nobody's going to service better than ServiceNow, and they're going to come up with agents that are really fine-tuned and optimised for the work that uses the tools that they have.'

Huang also told analysts that Nvidia continues to work with OpenAI toward a partnership agreement and believes the companies are nearing a deal closure. The companies announced a $100 billion partnership in September 2025.

Experts Share Diverging Views

Software service provider stocks have faced downward pressure in recent months amid concerns that AI will impact the industry over the long term.

Niles Investment Management founder Dan Niles said: 'People need to remember that all everything — whether it's the railroads, canals, the internet, all of these things tend to get overbuilt — and then we figure out who the winners and losers are going to be,' adding that not all companies will emerge unscathed as AI threatens to automate workflows and lower barriers to entering the market.

'There are some real companies that are going to go to zero in the software space,' Niles said, adding that resilient companies will emerge from the database and cybersecurity sectors.

Elsewhere, Deepwater Asset Management's Gene Munster said the rapid AI buildout was likely to continue for a long time, adding that AI is accelerating faster than people not using these tools can comprehend.

However, financial expert Jim Cramer refuted the predictions. He said that fears of an AI-fueled existential threat for software firms were overblown.

'The software companies are survivors. They can merge. They can adapt. They can do whatever is really necessary to get it so they stay in business,' Cramer said Wednesday. 'They're priced for perfection, though, and they do seem to have, let's say, kind of a rugby-scrum feel about them — and we don't pay up for scrum.'

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