Nvidia CEO says AI trade is a 5-layer cake: How to play

Yahoo Finance Video and Julie Hyman

December 6, 2025

In this video:

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Nvidia (NVDA) CEO Jensen Huang likened the artificial intelligence (AI) trade to a five-layer cake, highlighting energy, chips, infrastructure, model, and applications as the layers.

T. Rowe Price science and technology equity strategy portfolio manager Tony Wang joins Market Catalysts to discuss investing in the AI trade.

To watch more expert insights and analysis on the latest market action, check out more Market Catalysts.

Video Transcript

00:00 Speaker A

Jensen Wong compared the growing AI economy to a five-layer cake recently. He broke it down as energy, chips, infrastructure, models, and applications. So how can investors play all five layers and make smart picks beyond the traditional Magnificent 7 stocks? I want to bring in Tony Wang, T-Ro Price Science and Technology Equity Strategy portfolio manager. Tony, good to see you. Thanks so much for being here. So obviously, one of the biggest spokes people for AI generally is Jensen Wong. So when he sort of breaks down the different components there and also pushes back against the AI idea of an AI bubble, the market does listen to him. Um where we are right now in this progression, how are you thinking about it through your investing strategy lens?

00:52 Tony Wang

Yeah, well, I think that uh we’re still relatively early in the build out for AI. I mean, this is a total refactoring of how things have been done historically. So I really think that the AI infrastructure build out is like the railroads of today. And so, um to me what matters is that uh, you know, there’s continued to be additional use of AI and this transition going into generative AI and eventually the physical world. So, that’s what I’m looking for in terms of like, you know, the inference capabilities, powering a lot of new applications, uh the token profitability for the consumption. And then in terms of the training side, I think what matters is this uh that the move to AGI is actually accelerating. And so, um I think we’ve seen a lot of encouraging data points along the way in the last few weeks.

01:35 Speaker A

And specifically also, what about um the data points from the companies themselves in terms of profitability, in terms of revenue generation, what are you finding sort of most encouraging throughout that universe that that illustrates return on investment?

01:52 Tony Wang

Yeah, well, so when an industry is going through uh hyper growth, I think there’s going to be a lot of capital chasing it and then there’s also going to be a lot of competitors and players that enter the market, uh both existing and new. So, I don’t think the returns are going to be evenly distributed. So I think it’s not you know, surprising that some companies are making a lot more gross margin than others. And so, um to me what matters is that you want to invest on the platforms that are able to provide a lot of value and capture a lot of value along the way.

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