Nvidia‘s (NASDAQ: NVDA) revenue has been increasing consistently due to its expertise in powering artificial intelligence (AI) projects. The company’s graphics processing units (GPUs) are the fastest available, making them crucial for AI deep learning models that provide outstanding performance.
Nvidia’s data center revenue has reached record levels, surging over 400% to $18.4 billion in the latest quarter. The data center business goes beyond just leading AI chips, offering a comprehensive range of products and services to help customers enhance their AI platforms. Recently, the software and services segment reached a $1 billion annualized revenue run rate.
CEO Jensen Huang mentioned during the earnings call that software could become a significant business in the future. This indicates that software might be the new growth driver for Nvidia, further expanding its dominance in the AI industry.
Nvidia’s software opportunity
The software opportunity for Nvidia involves providing customers with a platform for AI operations management. This platform ensures security, stability, and efficiency by handling software optimization, updates, and more.
One of the flagship products, Nvidia Rapids accelerator combined with Apache Spark data processing system significantly improves operational speed and cost-effectiveness compared to traditional CPU-based systems.
According to Huang, every enterprise deploying software on various platforms globally could benefit from Nvidia AI Enterprise, making it a crucial aspect for future growth.
GPUs are the key
While Nvidia’s GPUs remain the cornerstone of its offerings, expanding into diverse products and services powered by these GPUs paves the way for further growth. Software, being vital to AI, presents an opportunity for Nvidia’s next major AI growth driver.
This indicates that Nvidia’s growth potential remains strong, despite its impressive performance in the past year. The company’s focus on software, evident through increased R&D spending, indicates a commitment to innovation and long-term growth.
With its software platform available through leading cloud providers, Nvidia seems poised for continued growth, leading to potential share price appreciation over time.
Considering its forward earnings estimates, Nvidia appears undervalued for a company with substantial long-term potential, making it an attractive investment opportunity even after its significant rise.
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Adria Cimino has no position in any of the mentioned stocks. The Motley Fool holds positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
This May Be Nvidia’s New Artificial Intelligence (AI) Growth Driver. Could the Stock Continue to Soar? was originally published by The Motley Fool
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