Why Nvidia Might Be the Most Compelling AI Stock for the Next Decade

Nvidia (NASDAQ: NVDA) caught investors' attention a few years ago as it emerged as a key player in artificial intelligence (AI), a technology with game-changing potential. Many invested early in this stock, betting the company's top AI chips would deliver explosive revenue growth -- and that bet was a winning one.

This tech giant's earnings have soared, reaching record levels, and the stock price advanced too -- more than 900% over three years. This is because cloud service providers and other companies have rushed to get in on the graphics processing units (GPUs) that power the most essential of AI tasks.

Now, though, after Nvidia's massive earnings and share price gains, you may be wondering whether the company's best days are in the past. After all, competition has increased, and the AI story is advancing into its next stages. Still, the signs we're seeing suggest a lot more growth ahead for this AI superstar. In fact, Nvidia might even be the most compelling AI stock for the next decade. Here's why.

Image source: Getty Images.

The most important AI player

Before we get to that, let's catch up on the story so far. As mentioned, Nvidia has been the most important player in the AI story, and this is thanks to a few factors. Clearly, one of them is the company's solid technology, as it's designed the most powerful GPUs and maintained this quality over several years. Another important point is that Nvidia decided to get in on this market early, giving itself a head start. This continues to benefit the company today -- since it constantly innovates, others find it difficult to leap ahead.

Finally, Nvidia hasn't stopped with the GPU, but instead has built out an entire ecosystem of products and services, and has even developed platforms to suit specific industries such as healthcare and automotive.

These elements and others have helped Nvidia reach the top -- and hold onto that position. Now, let's consider why Nvidia may also be the key AI stock to own for the next decade. And it starts with a prediction that Nvidia chief Jensen Huang made a couple of months ago and continues with a recent deal the company announced.

As much as $4 trillion in spending

Huang said that AI infrastructure spending may reach as much as $4 trillion over the coming five years. This is spending by cloud service providers and others that are building out data centers -- and the key elements needed in such centers are high-powered GPUs. Since these customers aim to win in the AI market, it's likely that they'll want to fill their data centers with the best GPUs around, and that may translate into significant sales for Nvidia. So, Nvidia is well-positioned to benefit from this infrastructure spending phase.

And once the buildout has reached later stages, Nvidia will continue to benefit because its chips aren't just used to train models -- they also are needed on an ongoing basis to power models through their problem-solving jobs.

Nvidia and Nokia

On top of this, a recent deal Nvidia announced should further expand its reach -- and revenue potential. The company has partnered with Nokia to bring AI to next-generation mobile networks. So, Nvidia, thanks to its accelerated computing platform for telecom, is on track to become a central player in telecom infrastructure -- potentially revolutionizing the market -- in the years to come.

Though, as I mentioned earlier, rivals exist, Nvidia may stay ahead due to its focus on innovation and the fact that it's been expanding the use of its technology into as many areas as possible. Of course, rivals may gain some market share, but their gains don't necessarily equal a loss for Nvidia. There is enough demand in the AI market -- and potential for new ways to use Nvidia's technology, as we see in the telecom example -- to power Nvidia's revenue strength well into the future.

And that's why Nvidia, even after its explosive growth in recent years, still might be the most compelling AI stock for the next decade.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.