Jensen Huang thinks semiconductors will be the largest industry in the world "by far" — and this might be key to getting Nvidia stock to $500

Nvidia (NASDAQ:NVDA) CEO Jensen Huang didn't seem phased in the slightest by the recent volatility hitting the semiconductor industry. Despite Michael Burry's shorts and calls for an AI bubble, volatility is really nothing new for Nvidia's legendary founder. In the meantime, it's going to be tough to stop traders from trying to time the top of the cycle.

Looking at the chart of the iShares Semiconductor ETF (NASDAQ:SOXX), it certainly feels like a rounded top is in the books. The negative momentum is picking up, and the bear market has officially arrived for the industry.

If you're like Mr. Huang and don't think this is it (it probably isn't, given where AI demand is at), this latest plunge might be nothing more than another opportunity to buy in the multi-year AI infrastructure buildout, one that could mean the same old chip winners just keep on posting wins. It's tempting to bet against the explosive momentum trade as it exhibits its first prolonged period of choppiness, but, at the same time, timing peaks can be as hard as timing tops.

Jensen Huang comments on semis are profound

Jensen Huang seems to think that the market is missing the structural shift that's happening. The man envisions "trillions of AIs" (or trillions of autonomous AI agents) running. Does it sound kind of far-fetched to think about having more agents than humans on Earth?

Perhaps at this stage, but if you consider agentics, factory and home robots, as well as consumer AI agents in the pockets (or another device) of just about every person who owns a smart device, I think Jensen Huang's comments are not only realistic, they're inevitable. When you consider multiple agents per person in the workforce (the agents-to-employee ratio could really start to rise), there's a chance that the semiconductor demand might be vastly underestimated.

For now, the semi companies are going to just hang onto their licenses to print cash. And time will tell how long they'll have it. Jensen Huang's words suggest the demand is just getting started and that the revolution is only being held back by hardware constraints. He very well may be right.

Nvidia's ready for semis to keep rising up the ranks

As Nvidia moves up the stack (or five-layer cake, as Mr. Huang put it), perhaps his firm will be even better positioned for what's next in the AI revolution. It has the partnerships, the visionary, and until Jensen Huang starts showing that he's worried, I certainly wouldn't throw in the towel on Nvidia shares, especially as shares contract and the valuation plunges to depths that actually make it one of the cheaper members of the Magnificent Seven.

And while Nvidia might no longer be the world's largest company, at least as of the time of this writing, I do think it's hard to argue against where Nvidia could go if Nvidia's top boss is proven right. For now, the Street-high price target of $500, which implies a 148% gain, seems plausible if all goes right and the second half delivers on the front of AI-driven value.

If we have a few more Mythos moments, I do see the momentum returning to the semis. Whether semi can become the largest industry in the world or experience a 2000-style bubble burst, though, remains the big question that the market's grappling with right now.

The bottom line

While AI chip demand probably won't see infinite demand, I do acknowledge that it could reach a very large number over a very lengthy period of time. Of course, investors should be skeptical when a semiconductor executive talks up his industry. At the same time, though, Jensen Huang has been right in big ways before, and given his vantage point, his comments are more than notable.

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