Nvidia's Jensen Huang Just Delivered Big News to Shareholders. And It May Influence Your Decision on Whether to Buy Nvidia Stock Right Now.

Nvidia (NASDAQ: NVDA) has seen earnings explode higher quarter after quarter as tech giants rush to get in on its latest artificial intelligence (AI) systems. And that has led to outstanding stock performance -- the shares have climbed more than 600% over the past three years as this AI revolution heats up.

But in recent months, investors have expressed concern about one thing in particular. They've worried about whether the high levels of demand will last. Major cloud providers such as Microsoft, Amazon, and other tech leaders have pledged to spend nearly $700 billion this year on infrastructure build-out, and this, of course, is benefiting chip designers such as Nvidia. The concern, though, is that any slowdown in the pace of such spending could do just the opposite -- and weigh on growth.

Considering all of this, investors have been particularly tuned in to any messages from tech giants that may offer insight into what's to come. Nvidia chief Jensen Huang, in this week's earnings call, just delivered big news to shareholders -- and it may influence your decision on whether to buy Nvidia stock right now.

Image source: Getty Images.

Nvidia in the AI environment

First, though, let's take a quick look at the AI story so far and how Nvidia has evolved in this environment. In the earliest stages of the AI boom, customers focused on training large language models -- and to pour incredible amounts of information into these models at high speeds, they needed compute. The ideal compute came in the form of Nvidia's graphics processing unit (GPU).

While other AI chips may also fuel training, Nvidia's GPUs have done it faster and more efficiently than any other. Customers rushed to get in on these powerful tools and complete AI systems, and this has supercharged Nvidia's revenue growth.

As mentioned above, after such high levels of growth and demand, investors have questioned whether Nvidia's best days may be behind the company. The idea is that, though major tech customers are spending big on infrastructure now, this may not last forever. It's important to note, however, that AI doesn't end with training -- in fact, that's just the beginning.

And this leads me to the big news Huang delivered to shareholders this past week.

"Demand has gone parabolic," Huang said. "The reason is simple. Agentic AI has arrived. AI can now do productive and valuable work."

Need for GPUs and CPUs

AI agents use the knowledge from all of that training to take action and complete tasks. And the key point here is to do that work, AI continues to need compute in the form of GPUs -- and central processing units (CPUs). Nvidia has this covered with its current Blackwell system and its newest platform, Vera Rubin. Tailored for the needs of AI agents, Rubin is set to ship in the third quarter of this year.

On top of this, customers continue to flock to the current Blackwell platform, so Blackwell and Rubin are positioned to propel Nvidia's growth in the quarters to come. The company says the number of partner data centers that have surpassed 10 megawatts has almost doubled in 12 months.

What does this mean for investors? Huang clearly delivered positive news, and this is news that should also relieve the worries of investors who questioned the future growth opportunity. We're seeing that the need for compute is ongoing and may even increase as more and more companies actually apply AI to real-world situations.

Meanwhile, the recent worries about the sustainability of demand weighed on Nvidia stock in the first quarter and, as a result, lowered its valuation. Even though the stock has since rebounded, valuation remains very interesting. The stock trades for 25x forward earnings estimates, down from 40x at the start of the year.

So, after this big news from Jensen Huang, Nvidia stock looks like a buy.

Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.