These Words From Jensen Huang Signal Something Major Ahead for Nvidia

Nvidia (NASDAQ: NVDA) has become almost a household name in recent years thanks to the artificial intelligence (AI) boom. But this company's successes didn't happen overnight. Jensen Huang founded the company more than 30 years ago, advancing its graphics processing unit (GPU) from the video gaming market into other areas -- and it was this chip's move into AI that created the tech superpower we know today.

But it's key to remember that the research and development that spanned these past three decades brought Nvidia to its current position of AI chip leader. This has grabbed the investment world's attention because the AI dominance has created enormous earnings growth and stock performance. Nvidia just reported an 85% increase in quarterly revenue to $81 billion and a 211% gain in GAAP net income to $58 billion, each reaching record levels. This is after Nvidia reached more than $215 billion in revenue in the last full year. And the stock has soared 600% over the past three years.

After such a performance, investors may wonder what's next for the AI giant -- these words from Nvidia chief Huang signal it could be something very significant.

Image source: Getty Images.

Huang realizes the AI potential

First, though, let's catch up on Nvidia's AI story so far. As mentioned, Nvidia was around long before the AI revolution, fine-tuning its world-renowned GPUs. When Huang realized their potential in AI, he shifted focus to this exciting new market and tailored these high-performance chips specifically for the needs of AI. This clearly was a winning bet, considering the earnings acceleration in recent years.

Nvidia didn't stick to GPUs only, though, and instead built out a vast portfolio of supporting products and services. And as part of this, the company even tackled individual industries, developing platforms specifically to suit the needs of healthcare companies, autonomous vehicle players, and more. All of this set Nvidia on the path to high growth, and the company's focus on innovation and predicting the next growth areas in AI has kept it there.

Nvidia released its Blackwell and Blackwell Ultra platforms over the past year and a half and focused these new systems to handle inference, or the "thinking" AI does to produce an answer to a particular question or problem. This worked out well for the company, with demand for Blackwell soaring and driving revenue growth in this time period.

Now, let's consider some words from Huang, delivered during the earnings call this week.

"We have a major new growth driver -- Vera," Huang said. "Vera Rubin is going to be even more successful than Grace Blackwell."

A $200 billion market

Why? Rubin, with its focus on powering agentic AI, opens up a new total addressable market of $200 billion for Nvidia. The tech giant has been known for GPUs for most of its past, but the Rubin element that stands out today is actually the central processing unit (CPU). CPUs are the general processors that power computers. Nvidia constructed Rubin to include CPUs specifically meant for agentic AI -- and this, the putting of AI to work to handle complex tasks, is seen as the next growth driver in the AI story.

In fact, this might be a game changer for Nvidia, propelling it to leadership in the GPU and CPU market. The company says it's on track for $20 billion in CPU revenue this year, which puts it on the road to becoming the biggest CPU supplier globally.

Nvidia expects to ship Rubin systems in the third quarter of this year and says demand is already in place with most major customers "ready to go." All of this suggests that Nvidia may be preparing for yet another big wave of earnings growth later this fiscal year and well into the following fiscal year.

This is great news for Nvidia shareholders as it means this company is well-positioned to benefit from the next stage of AI growth. And this stage may be long-lasting as companies hop on board the AI train and put the technology to use.

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.