There is no denying that Artificial Intelligence (AI) is the driving force behind Nvidia‘S (NASDAQ: NVDA) stunning stock market rally since late 2022, as the rapidly growing adoption of this technology led to exceptional growth in the company’s revenue and profits.
For example, Nvidia’s data center revenue skyrocketed 154% to a record $26.3 billion in the second quarter of fiscal 2025. The segment’s surge in revenue was behind Nvidia’s total revenue rising 122% year-over-year to $30 billion, beating Wall Street expectations. Even better, the company’s forecast was stronger than analysts were hoping for, but the stock’s share price action suggests the market isn’t happy with the numbers and outlook.
AI fatigue may have hit Nvidia
Investors don’t seem all that excited about Nvidia’s recent quarterly performance, as the stock has been on a downward spiral since its earnings report on August 28. That could be because Nvidia expects revenue to grow “only” 80% year-over-year to $32.5 billion in the current quarter.
Of course, the chipmaker’s guidance does indicate a slowdown from last quarter’s measurements, but that was inevitable given the sheer size of Nvidia’s business and the revenue it’s already generating. Again, the relatively modest outlook compared to last quarter may have raised concerns among investors that Nvidia’s eye-popping growth could eventually slow.
The good news is that the AI chip market appears poised for impressive growth in the long term, which could allow Nvidia to maintain healthy growth levels thanks to its dominant position in the market. However, concerns about AI’s ability to deliver sufficient returns for companies that have sunk billions of dollars into the technology appear to be weighing on investors’ minds.
So you could argue that investors and analysts might want something more than AI to bolster their faith in the company’s long-term growth prospects. That’s where an emerging $143 billion market could come to Nvidia’s rescue — a market that’s not big enough to sustain the company right now, but has the potential to become a major growth driver in the long run.
This huge market could be the next big catalyst for the company
According to market research report aggregator Market.us, the cloud gaming market was worth an estimated $5 billion last year. But this market is expected to show an impressive annual growth rate of almost 47% through 2032, generating $143 billion in revenue by the end of the forecast period.
The good news for Nvidia investors is that the company is aware of this lucrative opportunity. The company already offers a cloud gaming service known as GeForce Now. While Nvidia doesn’t provide many details about the service and counts its revenue within the gaming segment, it did reveal that GeForce Now had 25 million members last year.
Investors should note that GeForce Now also has a free membership tier, so the number of Nvidia’s paid cloud gaming subscribers is unclear. However, according to Market.us, GeForce Now had 9 million users as of last year, and that lower number compared to the service’s total member base may indicate the number of paid users.
The number of GeForce Now subscribers is larger than the combined user base of PlayStation and Xbox cloud gaming users, according to Market.us. More specifically, SonyPlayStation’s cloud gaming service had 3.6 million subscribers last year, while MicrosoftThe number of Xbox cloud gaming users was 4.2 million.
For comparison, the research report says that the total number of paid cloud gaming subscribers was nearly 30 million last year. That puts Nvidia at 30% of the cloud gaming user base. More importantly, there’s a good chance it can convert more of its free members into paying subscribers thanks to a rapidly growing library.
Nvidia management said during its latest earnings conference call that it offers a library of over 2,000 titles on GeForce Now, which the company claims is “the most content-rich of any cloud gaming service.” But even if Nvidia manages to maintain a 30% share of the cloud gaming market over the next decade, it could still generate over $40 billion in revenue from the market, based on its $143 billion market estimate.
However, according to Statista, the average spending of each cloud gaming user is set to grow impressively over the next few years, from $14 last year to nearly $38 in 2027. This could see Nvidia capture a larger share of the cloud gaming market revenue in the long run, outpacing its user share. More importantly, Nvidia has already built up a nice user base in cloud gaming that it could eventually capitalize on.
All of this suggests that cloud gaming could be a sizable business for Nvidia in the long run, and it wouldn’t be surprising to see the company generate a much higher amount than the $40 billion estimate. Cloud gaming could give Nvidia’s gaming business a significant boost in the long run, as the company has generated just over $11.2 billion in revenue from the segment over the past four quarters.
Add to that secular growth opportunities in the personal computer and digital twin markets, and there are multiple reasons for investors to remain bullish on Nvidia for the long term, beyond AI. Buying and holding this tech stock for the long term could prove to be a smart move.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft and Nvidia. The Motley Fool recommends the following options: long Jan 2026 $395 calls on Microsoft and short Jan 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Forget Artificial Intelligence (AI): Here Are 143 Billion Reasons to Buy Nvidia Stock Hand Over Fist was originally published by The Motley Fool
