Nvidia's (NASDAQ:NVDA) Revenues have soared quarter after quarter thanks to its expertise in powering artificial intelligence (AI) projects. The company's graphics processing units (GPUs) are the fastest and power deep learning for AI models, one of the key elements of AI, and serve as the starting point for future incredible performance.
All of this has driven Nvidia's data center revenue to record levels, increasing more than 400% to $18.4 billion in the most recent quarter. But this data center business is about more than just a series of major AI chips. The company provides a full range of products and services to customers through its data center unit to help customers advance their AI platforms. And one of those services is software and services, a business that just hit his $1 billion in annual revenue in the same quarter.
Indeed, CEO Jensen Huang said on the earnings call that software should become “a very important business over time.” All of this suggests that the software could be the driving force behind Nvidia's new AI growth, further expanding the company's opportunities to dominate with this hot technology. Could this rapidly rising stock continue to soar? Let's check it out.
Nvidia Software Opportunities
So what exactly is this software opportunity? So let's consider what businesses can do with AI on their own, and then look at what Nvidia has to offer. To build an AI software platform, companies can collect a variety of open source software elements and incorporate them into their existing infrastructure.
However, relying on a large number of open source packages makes it difficult to maintain security and stability. These are not small problems. Failure in these two areas can lead to the failure of the entire AI project. And many companies don't have the engineering resources needed to keep their software stacks running on-site and across all cloud service providers around the world.
This is where Nvidia develops Nvidia AI Enterprise, a type of operating system for AI. Nvidia manages its customers' software stacks through Enterprise, doing everything from optimizations to updates and more.
Pre-trained models and tools available through the software system also help customers improve efficiency, resulting in lower costs over time. For example, combining GPU-powered Nvidia Rapids accelerators with an Apache Spark data processing system can make jobs 5x faster and reduce operating costs by 5x. This is compared to a system that relies on a central processing unit (CPU).
“My guess is that every enterprise in the world, every software company that's deploying software in the cloud, private cloud, on-premises, is going to run on Nvidia AI Enterprise,” the company said in an earnings report. said Huang.
GPU is the key
All of this suggests that software could indeed be Nvidia's next growth driver. Yes, the company's top GPU is the key product behind all its other products. But by leveraging the power of these high-performance chips to expand its robust and diverse range of products and services, Nvidia is expanding its opportunities for growth. And with his key role in AI, Software could be Nvidia's next big AI growth driver.
Does this mean that NVIDIA could continue to soar after rising over 270% over the past year? This means that Nvidia has a long-term It definitely suggests that they have what it takes to continue moving forward.
That's because Nvidia's software ambitions confirm that it's not just about GPUs. Indeed, tech giants have to stay ahead of their rivals when it comes to chip performance. Rising research and development (R&D) spending shows it's a priority. Last year, Nvidia's R&D spending increased 18% year over year.
Nvidia's software strategy, and the fact that its software platform is available through all major cloud providers, points to yet another area that could drive impressive growth going forward. And that should drive the stock price even higher over time.
All of this means that Nvidia's stock, which currently trades at 32 times forward earnings estimates, looks pretty cheap for a company with so much long-term potential. That makes this growth stock, which is already soaring, a great buy right now.
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Adria Cimino has no position in any stocks mentioned. The Motley Fool has a position in and recommends Nvidia. The Motley Fool has a disclosure policy.
This could be the driver for Nvidia's new artificial intelligence (AI) growth. Is it possible that stock prices will continue to rise?Originally published by The Motley Fool