Nvidia CEO Jensen Huang Personally Joined a Closed-Door Morgan Stanley Roadshow to Address 3 Investor Concerns. Nvidia Stock Is Down 4% Since He Spoke.

Jensen Huang, CEO of artificial intelligence (AI) semiconductor giant Nvidia (NASDAQ: NVDA), showed up at Morgan Stanley's Technology, Media & Telecom Conference in San Francisco in March with three important messages for investors.

This came at a time of growing anxiety among market participants about the potential returns -- or lack thereof -- from the $7 trillion expected to be spent globally on AI data centers by 2030. After soaring in recent years, Nvidia and other AI-related stocks have underperformed the broader market this year.

So it made sense that Huang, whose company is central to the AI revolution, would address some of these concerns that investors are beginning to feel.

Image source: Getty Images.

Huang had three main messages for conference attendees, which included executives from almost 400 major global companies and over 2,000 capital allocators, according to the investment bank.

First, he said that rising demand for compute, the data processing that AI cloud centers deliver to users, translates directly into token generation, greater revenue, and higher GDP.

Tokens are the fundamental unit of AI work and consist of small chunks of output data; 100 tokens equal about 75 words of output. And the AI industry is beginning to view tokens as the primary measure of what it delivers, much like how electric utilities use kilowatt-hours to measure and bill for the electricity they provide.

Huang said that data centers are AI factories whose primary output is tokens, adding, "I'm certain compute equals revenues."

Huang says tokens per unit of energy will be the key metric for CEOs going forward

Second, Huang stated that efficiency, measured in tokens per watt, will become the most critical metric for CEO-level decision making. That is, because AI data centers are constrained by the massive amounts of energy they consume, tokens per watt will become the primary factor of revenue growth. Company executives, he said, will have to take that efficiency metric into careful consideration with every decision they make.

Finally, the Nvidia CEO said that agentic AI, or AI systems designed to act autonomously with minimal human interaction, is poised to expand and evolve the software industry. Instead of licensing software tools, which is the traditional software business model, companies will rent out specialized AI agents. And software firms' primary input will be tokens, with their output an AI agent.

"The IT industry is a couple trillion dollars today. They're tool renters," Huang told the conference. "In the future, they'll rent agents that use those tools, which means that the software industry in the future will be much larger than the software industry of today," Huang said.

How effective were Huang's three messages in reassuring investors about the potential returns to the AI build-out? Well, Nvidia stock is down about 4% since the conference. But that could be because those messages haven't really been conveyed to, or well understood by, the wider market.

Matthew Benjamin has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.