Nvidia (NASDAQ: NVDA ) Largely viewed by investors as a graphics processing unit (GPU) stock. That is, the company basically manufactures, markets and sells GPUs: specialized electronic circuits that enable everything from modern games to image rendering.
And while GPUs are critical components for many industries, only one industry is really important to Nvidia and its investors right now: artificial intelligence (AI). Of course, Nvidia is probably the most popular AI stock in the world in the last few years. But as the numbers discussed below prove, this is no longer just a growth opportunity for the company. Nvidia’s future will depend almost entirely on what happens to its AI infrastructure business.
Will AI create the world’s first trillionaire? Our team just published a report on a little-known company, called “Essential Dependency” that provides critical technology to both Nvidia and Intel. Continue »
Right now, the world is experiencing unprecedented growth in data center construction. Data centers, at least for now, use a lot of energy. That is why we are also seeing significant interest in new energy technologies such as small modular nuclear reactors. But what data centers require the same energy are GPUs. Nvidia GPUs are widely considered to be the best on the market. That’s why data center and cloud infrastructure operators are scrambling to buy as many Nvidia chips as possible.
Historically, Nvidia’s GPU revenue has come from a variety of sources. But last quarter, $62.3 billion of the $68.1 billion in total revenue came from data center customers. And while these data centers also serve different end markets, there is no doubt among experts what is the reason for their rapid development: AI.
“As technology companies race to develop cutting-edge artificial intelligence (AI) models, data centers have become one of the most critical infrastructures in the world,” the latest concluded. Goldman Sachs “Over the next five to six years, we predict significant demand growth in the global data center market,” the report said.
So while the market has long viewed Nvidia as an AI beneficiary, that’s no longer the whole story. Nearly all of Nvidia’s revenue now comes from data center customers alone, which are struggling to scale due to rapidly increasing demand from AI. In short, Nvidia’s investment thesis is now almost entirely focused on AI. And it’s not just focused on the development of AI applications and services. The future of the company will depend exclusively on the continuous construction of data centers designed to meet the needs. These data centers AI client.
