There were so many takeaways from the sitdown between Nvidia (NASDAQ:NVDA | NVDA Price Prediction) CEO Jensen Huang and Dwarkesh Patel. The interview got quite heated towards the end, to say the least. But Huang did say that he was “enjoying it,” as Dwarkesh threw some pretty difficult questions at the man many consider to be the face of the AI revolution. In any case, Jensen Huang’s remarks on the state of software and the impact that the rise of AI agents will have were most interesting. Indeed, it’s no mystery as to where the great Jensen Huang stands when it comes to software in the age of agents.
In many ways, Huang holds a contrarian view that goes against the SaaS-pocalypse action we saw in the first few months of the year. Huang not only thinks that software isn’t dead as agents become more capable at coding and all the sort, but he believes that instances of software stand to “skyrocket.” Indeed, it’s a bold take, and given Huang’s track record, I’d be more willing to side with him than the rest of the market.
Why Jensen Huang’s view of AI tools and software just makes the most sense
Perhaps investors, in a moment of intense fear, are missing the big picture, oversimplifying the situation as everyone else becomes more than willing to liquidate holdings, just because of the industry they’re in and the recent taste of agentic AI disruption that was almost palpable just over a month ago. I don’t know about you, but I’d rather listen to Huang than the market, especially since it’s been troubled with numerous fearful headlines in the first quarter.
In any case, Huang’s view is that agents will become users of tools (he drew comparisons to Microsoft (NASDAQ:MSFT) Office and EDA tools from Cadence Design Systems (NASDAQ:CDNS).
He’s right. These firms aren’t just offering pieces of commoditized software that will become obsolete overnight. They’re making real, useful tools. It’s going to be incredibly difficult, even for agent-equipped rivals, to narrow the moats of the likes of Microsoft or Cadence, especially since their pockets are deep, their data advantages are real, and their AI capabilities are arguably among the best in their respective industries.
Jensen Huang has an interesting perspective that I think the rest of the market is missing, given the great uncertainty that comes with revolutionary technological shifts.
While not every piece of software will win in the agent era, especially those that can be easily replicated by agents, I do think the most entrenched, best-in-breed tools probably aren’t going away anytime soon. Certainly not fast enough to justify the reaction we’ve seen in the software space over these past few months.
Agents could be a major spark for the AI software winners
In my view, Huang’s outlook for software is more than logical. And while time will tell which AI tools will emerge as go-tos for the many 24/7 agents to come and which will fade as something better and more agent-tailored comes along, I do see plenty of opportunity within the software space today.
In a prior piece, I also highlighted the importance of keeping a human in the loop as agents went about their workdays. Better, cheaper software remains a must in the agentic age, as humans look to keep tabs on the agent workforces working hard behind the scenes. As agents become more efficient and software becomes commoditized, I’d argue that the case for usage among humans could also skyrocket.
Perhaps investors are selling off software due to uncertainty, rather than the most logical path forward. Either way, if the pie is poised to become a heck of a lot bigger, the software players making the shift to becoming more AI-native, I think, will have what it takes to thrive.
Of course, there might be fewer players having a bigger share of the pie. So, aggression on CapEx might be all the difference between the winners who have a seat at the table and the losers who have their lunch eaten by more spend-heavy agent-savvy rivals.
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