Nivea(NASDAQ: NVDA ) In the year It was founded in 1993 and went on to create the world’s first graphics processing units (GPUs) for computing, media and gaming applications. Now, decades later, the company has adapted those powerful chips for data centers that are used to develop advanced artificial intelligence (AI) models.
Navia CEO Jensen Huang believes data center operators will spend $1 trillion over the next four years to upgrade their infrastructure to meet the demands of AI developers. Since the data center segment currently accounts for 88% of Nvidia’s total revenue, that spending will be instrumental in the company’s future success.
However, the semiconductor industry is always cyclical, so the data center boom won’t last forever. That’s why it’s critical for Nvidia to diversify its revenue streams, and on January 7 at the CES 2025 technology conference, Huang delivered some surprising news to investors on that front.
Image source: Nvidia
Navy saw The self-driving revolution. to come. Indeed, the company’s automotive business has been around for more than two decades, but revenues have been so small that they have been overshadowed by the gaming and data center segments. That’s all about to change, because international car brands love it Mercedes-Benz, Hyundai, Baidi, Volvo, Toyotaand others are using Nvidia’s Drive platform to power their own ambitions.
Drive provides all the internal hardware and software a car needs for self-driving capabilities. That includes Nvidia’s latest chip called Tor, which processes all the data from the car’s sensors to determine the best course of action. But Nvidia’s opportunity doesn’t end there, as the car company can also differentiate itself from the competition by selling the infrastructure needed to repair and upgrade its autonomous models.
In addition to Drive, Huang’s auto companies are buying DGX data center systems based on Blackwell’s GB200. GPUswhich provides the necessary computing power to continuously train self-driving software. Then there’s NVIDIA’s new Cosmos multimodal foundation model, which lets companies run millions of real-world simulations that serve as training material for the software.
Overall, Huang said autonomous vehicles could be the first multitrillion dollar opportunity in the new robotics space. He’s not alone, as Cathy Wood’s Arch Investment Management is looking at technologies like autonomous driving in 2016. Much of that value will be attributed to autonomous platform vendors, which he thinks could create $14 trillion in enterprise value by 2027 — in this case, that would be NVIDIA.
Nvidia’s fiscal year 2025 ends at the end of January, but the company generated $1.1 billion in automotive revenue in the first three quarters (if we extrapolate this result, full-year revenue would probably be around $1.5 billion). Huang expects Nvidia’s automotive revenue to reach $5 billion in fiscal 2026. He said it could escalate and increase insanely fast.
Wall Street’s consensus forecast (provided by Yahoo) suggests that NVDI could top $196 billion of total revenue in fiscal 2026, so the $5 billion contribution from the automotive division will still be relatively small. It’s a long-term story that could prove Nvidia’s future growth, but in the here and now, it’s all about the data center.
Nvidia has started shipping its new Blackwell GB200 GPUs to customers, but sales are expected to grow quickly. In April of this year, the revenue from Blackwell chips may exceed the revenue of the previous generation of chips built on the Hopper architecture, which shows how fast Nvidia’s business is growing.
The GB200 NVL72 system’s AI processing is up to 30 times faster than the same H100 GPU system, thus paving the way for Blackwell’s most advanced AI models to date. So, in the next year or so, consumers and businesses will have access to the “smartest” AI software applications (like chatbots and virtual assistants) yet.
Demand for Blackwell chips is outstripping supply, which should support further strength in Nvidia’s revenue and earnings in fiscal 2026. Data center GPUs market.
Since 2023, Nvidia stock is up 830%; This has increased the company’s value from $360 billion to $3.3 trillion in just two years. Despite the impressive run, the stock may still be cheap.
It currently trades at a price-to-earnings (P/E) ratio of 53.6, which is a discount from the 10-year average P/E ratio of 59. But the Wall Street consensus estimate suggests that Nvidia could earn $4.44 per share. Keeping the forward P/E ratio at just 30.6 in fiscal 2026.
In other words, Nvidia stock should grow 92% over the next 12 months.
Nvidia has a habit of beating Wall Street forecasts, so the stock may have more upside potential. On the flip side, there is some competition from other chip makers. Advanced Micro DevicesHe plans to release a Blackwell rival in a few months. It’s a risk investors should keep an eye on as this year progresses.
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Anthony DiPizzio It has no place in the said shares. He has spots in the Motley Fool and recommends Advanced Micro Devices and NVIDIA. Motley Fool recommends BYD Company. The Motley Fool has Disclosure Policy.
