Motley Fool Hidden Gems Investing - Nvidia’s Next Big Market

Episode Date: May 3, 2026

Where are we in the Nvidia story today? Is there an AI bubble? What’s Nvidia’s next big market? Motley Fool Chief Investment Officer Andy Cross talks with Stephen Witt, author of The Thinking Machine: Jensen Huang, Nvidia and the World's Most Coveted Microchip.  Host: Andy Cross Guest: Stephen Witt  Producer: Bart Shannon, Mac Greer  Disclosure: Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement.We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode.Learn more about your ad choices. Visit ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

So who was building robotic inference chips in 2017 when there was no robotics industry trying to buy this stuff? It was Jensen and it was NVIDIA. I've talked to maybe 40 robotics manufacturers in the past three or four months. Every single one without exception runs on an NVIDIA Thor Jensen chip in its brain. He is a monopoly on the robotics inference market which did not exist until he invented it. That was Stephen Witt, author of The Thinking Machine, Jensen Wong, NVIDIA, and the world's most coveted microchip. I'm Motley Fool producer, Matt Greer. Motley Fool Chief Investment Officer, Andy Cross, recently talked with Witt at our Motley Fool One member

event in San Diego. It was a great conversation. It covered a lot of ground, including the current state of NVIDIA, what really drives Jensen Wong, and why robotics might be NVIDIA's next big market. Enjoy. Early in his career, Stephen worked for a hedge fund. His writing has appeared in The New Yorker, The Financial Times, New York Magazine, The Wall Street Journal, Rolling Stone, GQ, and his book right there, The Thinking Machine, Jensen Wong, NVIDIA, and the world's most coveted microchip won the 2025 Financial Times and Schroeder's Business Books of the Year. Stephen Witt, thank you for being here. Stephen and I talked about it a year ago.

You can find that on the Fool website. We had a great conversation about NVIDIA. And Stephen, I just want to start off with, it's clearly one of the, if not the most important company in the world, but what is the current story about NVIDIA right now? What are you seeing about NVIDIA in the market? Right, so probably the most important thing is, like, are we in an AI bubble, right?

like is this so nvidia is not actually overvalued in classic metrics right it's 4p is 21 which is not some insane number yeah the question is is that e sustainable will it materialize right and so jensen has spent the last year trying to more or less guarantee that it will um the big thing that has happened since my book came out is obviously we've had the trump administration come in and jensen has got really personally close to trump they've appeared in public six or seven times you know all the silicon valley guys went towards trump but but jensen went towards him the most aggressively and if i'm being real i think he's been maybe the best at sort of you know manipulating trump to get what he wants out of him he's extraordinarily skilled at that and trump is

you know somewhat erratic figure he's difficult to predict what he's going to do but so far every decision he's made at the geopolitical level has been in line with jensen's interests which is pretty extraordinary, you know, leaving aside Iran and stuff. But all of the stuff in Asia has benefited Jensen. He lifted the chip ban on Chinese sales. You know, he kind of has been involved in kind of not putting tariffs on Taiwanese semiconductors. And then probably most importantly for Jensen, he's allowed or continued to allow kind of the H-1B visa holders to come into Jensen's company. If you go to NVIDIA now and look around the workforce, I would guess fewer than 50% of the people in the company were born in the United States. It's just this

incredible agglomeration of worldwide engineering talent from Asia, from Europe, Middle East, all over. And that's what makes NVIDIA work. It looks like a company that sells microchips, but they are in fact a large and sophisticated R&D laboratory on the order of something like Bell Labs, but they're much better at commercializing their products. That's incredible. What is the statistic about how many millionaires and billionaires, are inside the NVIDIA company today, or the estimates of that? It's funny, you mentioned, let me, I'll give a long answer.

In 2005, you recommended this stock. It looked terrible for the first probably six or seven years you recommended it. In 2008, their stock went down 80%. And people inside the company were growing upset because they'd purchased stock via the ESOP, and they were like, I'm really underwater here. Like, what do we do?

So Jensen implemented this policy that not only could you buy NVIDIA stock if you were an employee at a discount, but you could actually buy it at a discount to any point the stock had traded it in the last two years okay so as nvidia stock started to go like this they kept that policy in place so every employee in the place did this free money trade where they maxed out their cap to the esop and basically put all of their incremental earnings into like basically free money nvidia stock and then the rest of them just held it so now 50

of the company there's only like 30 40 000 people at the company 50 of them have a net worth exceeding 25 million dollars that's incredible i mean and if you look at like the the top layer of management i mean they're all at least sent to millionaires if not billionaires i was talking to um yeah i was talking to uh tench cox who's been on the board and actually was one of the first investors in 1993 before they went public and you know tench has invested in thousands of companies and uh you know as both as a venture capitalist as as a kind of classic stock market investor And I was like, is this your best investment? And he looked at me like it was the dumbest question

anyone had ever asked him. He was like, yeah, it's my best investment. And later I realized that if you have a founder's stake in the most valuable company in history, then by definition, that is the single best investment you could ever make in human history. Intention made it. That's just incredible.

You talked a lot about the, you just mentioned about the R&D efforts behind NVIDIA. And a lot of people and analysts think that NVIDIA is really good at catching the wave, But your take is different. And I want to unwrap this a little bit because they really are creating the waves. They're like the tsunami, the earthquake. They make the wave. Jensen calls this the zero billion dollar market. And what it is, it's building products that not only don't have any competitors, but actually have no customers. dead serious no that's the zero in zero billion dollar market there is no customers when jensen started building dedicated hardware for artificial intelligence that market segment

did not exist now this would be a little crazy to think about now 15 years ago ai was a career graveyard the total amount of venture capital investment in ai in late 2010 was closer to zero than any other meaningful number. And not only that, but it had repeatedly disappointed investors in the past. And so it was just used, not just the dead field, but like a radioactive field. You just didn't go there with money.

And every AI scientist I worked with at that time was like, yeah, I just kind of figured I would do what all AI people did, which was like deliberately earn less money for the rest of my life so that I could work on the thing I was actually interested in and I'd be a research academic.

The guys who really invented the modern neural net had so little money that they actually had to pool their housing stipend together to buy two NVIDIA gaming boards to train the first neural network. And that's the first really kind of like modern neural network. So that's where this stuff comes from. Jensen was serving this market segment that was so small that it was essentially invisible, right? He's making these gaming cards, okay? The original use is to speed up your frame rate in Quake or in Halo. And the reason you do that is that if you're shooting at the guy, you want a few more frames per second so you can get a better bead on him.

that's the technology that powers all of society now that's serious that's why they did it but this cutting-edge use case had a lot of other applications and one of them was kind of scientific computing or what we call supercomputing right now Jensen basically shipped all these cards with a second program on it where you'd flip the switch and turn your gaming board into a low budget supercomputer so who is that for well it's not for an established research scientist right Those guys can afford time on a conventional supercomputer. It's for a scientist whose research is out of favor from marginalized scientists, right?

With no funding. It's for a mad scientist, right? And that's what these guys were. That's what these AI guys were. They were mad scientists working off in the woods on weird projects that no one ever thought would succeed. And Jensen gave them the tools to not just kind of create the thing they wanted to create,

but actually to create an entire ecosystem and industry around it. So this is how the zero billion dollar market works. You go to a place where not only is there no competition, there's almost no customers at all. And then you hope that the fuel grows around what you've built. Then you've locked them into your system because you were the only one providing it at the original thing.

And you build a whole ecosystem around it. Jensen is doing this today. I'm writing about a humanoid robotics right now for the New Yorker. This is this coming wave of home humanoid robots. They look and they move and they act like humans. It's not gonna be shipped into industry, into service jobs, and maybe even eventually into your home. Well, to do this, you need a powerful AI inference chip.

This is the chip that is basically the robot's, literally it's its brain, right? It's a robot brain. So who was building robotic inference chips in 2017 when there was no robotics industry trying to buy this stuff? It was Jensen and it was Nvidia. I've talked to maybe 40 robotics manufacturers in the past three or four months.

every single one without exception runs on an Nvidia Thor Jensen chip in its brain. Is a monopoly on the robotics inference market which did not exist until he invented it, okay? So this is how Jensen thinks and this is how he works. And you know, there's a cost to this, right? Like he's losing money for years building these products that nobody is buying, right?

And it actually in the old days, in the 2005 days it almost got him kicked out of his job. Yeah. Like the investors didn't like it. They were like, what are you doing? You should be returning this money to shareholders via share purchases or paying a dividend. Why are you chasing this pie in the sky market that doesn't exist? But, you know, he had the last laugh.

Yes. A lot of laughs. Where some see heroes and others see egos. Bloomberg sees the era of billionaire athletes. While others follow the noise, we follow the money. Learn more at Bloomberg.com. How does Jensen marshal, you mentioned about the, just the challenge of talking to investors when they're making these investments, but just in a company like NVIDIA, how does he

marshal the commitment to be able to be that forward thinking in the way that he is attacking these big problems? From Jensen's point of view, it's actually riskier not to do it. I remember asking him, why did you ship this expensive supercomputing software with every card, including the ones you're selling at Best Buy? Like, why are you doing that? And he's like, well, it was risky to do that, but there was also a risk in not doing that. And a long time, I didn't understand what he meant. But Jensen is a disciple of Clayton Christensen, wrote a book, as I'm sure you're familiar with, called The Innovator's Dilemma. And this is the book that

brought the buzzword disruption into kind of modern parlance. You know, the term disruption has grown meaningless through overuse but you if you go back and read the original version what clayton is talking about is not necessarily high-tech technology in fact a pneumatic shovel was one of his first disrupted technologies and the canonical example he uses was the honda motor bike so when honda entered the u.s market in the 60s there was no room for another car so they marketed a dirt bike to teenagers basically actually the beach boys wrote a song about it and you know this was a low margin small zero billion dollar market basically but what Honda realized is that if they could kind of sell this market here GM wouldn't come and compete with them

it would lower GM's margins to build a dirt bike they're selling Cadillacs or high margin product if they go and open this small dirt bike business then investors will yell at them because their profit margins just went down they don't it's hard to move from a high profit margin business into a lower one but if you don't do it then you're very vulnerable to disruption to competition coming up from below and that's exactly what happened to GM which by the way in the 1970s was they were the NVIDIA of their time they were the most valuable firm in the United States but Honda came and raided their whole market from below as they iterated upwards from the dirt bike to a compact car to a minivan and eventually GM has nowhere to go Honda and Toyota have stolen

all their market share right so with Jensen he's like and this is the secret of the innovators dilemma it's not actually a manual for how startups can succeed it's a counterinsurgency manual for how established firms that are like aging out of their market can defend their territory against these startups and by the mid-2000s Jensen who had dominated the gaming market was now terrified of all these Asian startup companies that were going and building cheaper tools and he said I have to invest counterintuitively in a low margin business with very few customers. It's exactly what Clayton Christensen advises in his book. And actually Jensen hired Clayton as a consultant. I have to go invest in a market that is small, that does not return immediate capital because

my competitors won't follow me there. That's the only way to save this business. So for Jensen, the risk of inaction, the risk of not doing this is actually higher than the risk of just continuing to you know as he understands it especially in tech especially in tech and especially in semiconductors you cannot sit still right is only the paranoid survive as andy grove said so i have to build a business that's adjacent to oh and by the way my business we don't manufacture anything here it's all done in taiwan this is just an r&d laboratory so if i'm not constantly designing innovative new products i have no purpose to exist and i'll be competed out of existence. And you've written that he basically thinks like, hey, we're 30 days going out of

business at any given time. That's right. In fact, it was literally true several times at the beginning. It was tough sledding for Jensen. If you look at the first 15 years, even as a publicly traded company, it looks like an electrocardiogram of somebody having a heart attack. The stock went down 90% twice. It was tough, tough, tough, tough. He almost lost his job. There were activist investors involved. And during this period, he was just trying to get this company to find a market beyond video games. And I should say, you know, there were a lot of things that failed. There were a lot of $0 billion markets that to this day remain $0 billion markets. The customers never showed up for what they were building. But to Jetson, that's okay, right? As long as one succeeds

and you become the most valuable firm in human history, it doesn't matter if the other ones fail, right? So in addition to robotics, there's 30 initiatives now. I think a lot of them will not succeed, and he would probably tell you that. But he sees the logic, at least, or the potential for customers to arrive in each one. Where some see heroes and others see egos, Bloomberg sees the era of billionaire athletes. A fad to some, the future of money to others. We see crypto's trillion dollar swings, the end of jobs, or the end of human struggle. We see the endless funds fueling the AI hype. While others follow the noise, we follow the money. Learn more at Bloomberg.com. You earned and you were given kind of unparalleled access to NVIDIA, Jensen, his team.

What was the thing that impressed you the most? And what was the thing that maybe surprised you or maybe even unnerved you about learning about Jensen? The best thing about Jensen is just his candor. Like he, okay, I interviewed Jeff Bezos once. This was in like 2016. And Jeff is surrounded by an army of PR people and lawyers. And I have a list of pre-approved questions that I'm allowed to ask.

And I tried to ask him about, this was in 2016, I tried to ask him about Donald Trump's presidential candidacy. And the lawyer basically tackled me and dragged me out of the room. You don't go off script with Jeff. With Jensen, there is no script. You can ask him anything.

This guy's worth like a hundred billion dollars. He talks to you as if you're just sat down at a coffee shop with him. It's amazing. That's extremely rare. It doesn't happen with CEOs in my experience. And I've tried to interview or have interviewed many of them.

So his candor is just extraordinary and it really helps him in business too because he is the fastest to admit if something's not working, what needs to change. There was no illusions, right? and there's no sunk cost fallacy with Jensen. He's a really great critical thinker because he's so honest and rigorous with himself.

Now the flip side of this, it's like a Greek tragic flaw, the same thing that makes him great kind of makes it difficult for him. He's totally neurotic. I can confirm your suspicions that most CEOs are basically egomaniacs, but Jensen is not, truly. He truly is not.

In fact, he's like riddled with guilt and self-doubt, and this drives him, it fuels him. This is what makes it work for him because he's constantly assessing both NVIDIA's competitive position and his own role and asking, what's the thing that could make this company collapse? Weirdly, almost everything Jensen does comes from a negative emotion that he has, typically fear or guilt. And almost every action Jensen takes is actually, or at least can be construed as a defensive action to save his company from ruin.

It's a really unusual way of thinking. And I think actually his internal life is kind of hard. probably most people in this room have an easier kind of internal mental monologue than jensen has for himself i mean in some sense he truly is almost uncomfortable in his own skin he almost like hates himself he's beating himself up constantly i find this in some ways relatable i remember i was talking to jimmy iovine once this is on a separate story i wrote about music jimmy ivy is a music producer he worked with dr dre but early in his career he worked with bruce springsteen he's like yeah i'll never forget when bruce springsteen came into the studio

and he was like, God, I'm washed up. All of these younger artists are doing better work than me and it's all over for me. It's all over for me. And then he writes Born in the USA. And it comes from a place of feeling like he's washed up after 10 years in the music business, right?

It comes from fear. And Jimmy Iovine was, you can't believe how powerful motivator fear can be for an artist. I guess it's true for a CEO too. As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations

for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For the Motley Fool and Jim's investing team, I'm Mac Greer. Thanks for listening, and we will see you tomorrow.