The graphics processing unit (GPU) was the early star of the AI market, as it fuels key tasks.
Another product may drive AI growth in the coming quarters.
The area of artificial intelligence (AI) has represented a gold rush for companies and investors in recent years. Seen as revolutionary, with the ability to revamp processes and operations and boost innovation, it is viewed as the next big thing for the tech industry. The graphics processing unit (GPU) was the first winning product to emerge, as this powerful chip fuels the most essential of AI operations: the training of models.
Nvidia (NASDAQ:NVDA) is the leader in this market, having jumped in even before the AI boom began, but other chip designers have entered the fray in recent years. And these players, from Advanced Micro Devices to Broadcom, are generating tremendous growth amid soaring demand.
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While the GPU remains crucial to the development and use of AI, my prediction is that something else will represent the next big AI gold rush. And the following company will emerge as the winner.
Image source: Getty Images. Image source: Getty Images.
So, first, a quick catch-up on the AI story so far. As mentioned, Nvidia, seeing the potential of its GPUs in this market, shifted the focus of these chips to AI about a decade ago. Historically, Nvidia's GPUs generated most of their revenue in the gaming market -- and they still are heavily present there. But today, more than 90% of Nvidia's revenue is in the data center or AI market.
Nvidia's GPUs aren't just single chips, but entire systems that offer customers enormous power for their AI workloads. The Nvidia chip has proven to be the fastest around, and since speed is key for many AI customers, Nvidia has dominated the market. And the company's commitment to innovation has kept it in the lead.
In the early days of AI, the main operation was training AI models. This continues, but today AI is also being applied to real-world situations. Many say the next area of AI growth will be the agentic AI space; here, AI considers a problem and takes the necessary steps and actions to solve it.
This leads me to my prediction. The next big AI gold rush will be in the area of the central processing unit (CPU) for agentic AI. CPUs are the main chips found in personal computers and other devices, and, moving forward, they are seen as the key element to fuel agentic AI. The CPU is well-suited to guiding the AI through its various actions.
Right now, Intel and AMD dominate the CPU market, but a new kid is in town, and this kid aims for leadership. I'm talking about GPU giant Nvidia. This fall, Nvidia is launching its first-ever stand-alone CPU as part of its Vera Rubin rollout, and the company predicts that these CPUs will generate $20 billion in revenue this year alone.
Nvidia hasn't been shy about its intentions, saying it aims to lead in this space that presents a $200 billion revenue opportunity.
Considering that agentic AI involves the actual use of AI to solve real-world problems, it truly could be huge if companies and individuals jump on board. FactSet Insight recently noted that 321 S&P 500 companies in second-quarter earnings calls mentioned the term "AI," suggesting that AI is increasingly becoming part of business today. And the highly successful launch of Meta Platforms' personal AI agent, Muse, recently shows that individuals are looking at the area with interest, too.
To drive all of this agentic AI, CPUs are necessary. Of course, it won't be easy for Nvidia to unseat Intel and AMD in the area of CPUs for personal computers. They've long established their expertise and relationships here. But Nvidia is well-positioned to lead in the CPU market for data centers, and this could represent a massive opportunity as agentic AI gains momentum.
That's why I predict the CPU for AI will represent the next gold rush, and GPU winner Nvidia may win here too.
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Broadcom, Intel, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.