Nvidia ( NVDA 3.91%) has clearly come out on top in the initial stages of the artificial intelligence (AI) surge. The company prioritized developing chips specifically for the AI sector, and this strategic focus paid off. With Nvidia’s chips leading in speed, organizations looking to gain an edge in AI turned to the company. It’s also worth mentioning that these chips—graphics processing units (GPUs)—are vital for powering core AI functions, making them indispensable for AI achievement.
This focus fueled Nvidia’s impressive expansion in a relatively brief span—its yearly revenue skyrocketed from $27 billion two years ago to $130 billion last year. This upward trajectory hasn't slowed, as Nvidia still holds the leading role in the AI chip industry, continuously breaking revenue records. In its most recent quarter, revenue soared by 56% to roughly $46 billion.
Shareholders have shown strong support quarter after quarter, driving the stock to surge over 1,100% in the last three years. The best part is that this remarkable growth story appears far from finished. Nvidia’s CEO, Jensen Huang, just shared some outstanding news for investors.
Image source: Getty Images.
Meeting the demands of every AI client
Before diving deeper, let’s briefly review Nvidia’s present position. As previously mentioned, the company stands as the top AI chip creator. But Nvidia didn’t stop at that. Over the last several years, the business has expanded into a comprehensive AI platform, providing products and services suited to clients ranging from small startups to the largest cloud computing firms.
To further solidify its dominance, Nvidia has committed to yearly chip upgrades, making it extremely challenging for competitors to surpass them. The company has kept this promise, unveiling the Blackwell architecture late last year and, more recently, introducing the Blackwell Ultra update—and now Nvidia says it’s preparing to launch its next major advance, Rubin, in the coming year.
All of these efforts lay the foundation for Nvidia’s longer-term prospects, but there’s one factor beyond Nvidia’s control that’s essential to realize its full potential: demand. The company’s growth relies on customers investing in infrastructure and AI systems, which creates a market for Nvidia’s offerings. Any reduction in spending could negatively impact growth and cause investors to lose confidence in the soaring stock.
A trillion-dollar revenue potential
This leads to the positive update from Jensen Huang during the company’s latest financial report. Huang anticipates that investments in AI infrastructure could reach $4 trillion by the decade’s end, as major customers ramp up platform spending. Given that Nvidia has historically captured at least a quarter of all data center expenditures, this could mean a $1 trillion revenue opportunity for the company.
To put that in perspective, Nvidia’s record $130 billion in annual revenue could be dwarfed if infrastructure spending grows as Huang projects, potentially leading to a dramatic increase in sales.
It’s also worth noting that, beyond the factors previously discussed, Nvidia is likely to retain the loyalty of those investing the $4 trillion. The reason: for many clients, adopting Nvidia across the board is both simple and, over time, may be more cost-effective. Nvidia is available on all major cloud platforms, and its emphasis on energy efficiency—Huang claims Nvidia outperforms competitors in performance per watt—translates into lower total ownership costs over the long run. As clients continue to realize these savings, they’re likely to stick with Nvidia for both superior quality and enhanced profitability.
Growth could be just beginning
All these points are excellent news for investors, suggesting that Nvidia’s growth journey might only be starting—with plenty of future quarters likely to bring further gains. Of course, there may be bumps along the way, such as a slowdown in spending from a major client or negative economic developments, which could put temporary pressure on the stock. Nvidia must also keep its innovation pipeline on schedule—any delay could also dampen stock performance.
Nonetheless, even if Nvidia faces occasional setbacks, Huang’s latest announcement emphasizes the company’s strong long-term outlook—making Nvidia a compelling stock to buy and hold.
