Nvidia‘S (NASDAQ: NVDA) The performances lately have been nothing short of remarkable. I’m talking about Nvidia stock And Nvidia the company. The stock’s performance speaks for itself. Shares are up about 725% since January 2023.
But that price increase was not only caused by overly exuberant investors. Nvidia’s business itself has exploded, especially its data center business. Revenue from that segment has increased more than fivefold in the past year, boosting Nvidia’s net profit by more than 600%. Growth in sales of the company’s artificial intelligence (AI) chips to data centers hasn’t peaked yet, but there are already indications of what could drive Nvidia stock’s next big move.
Explosive growth in data center sales
Nvidia’s recent good fortune did not come by chance. Thanks to many years of research and development, it was able to create the most technologically advanced graphics processing units (GPUs) in the industry, and make them available to customers at a time when the need for that kind of computing power was skyrocketing. As Nvidia works to accelerate production to meet current demand, Nvidia already has the next-generation Blackwell chip series in production.
In addition, CEO Jensen Huang also unveiled a new AI chip that he plans to launch in 2026. The Rubin platform will succeed the Blackwell and include both GPUs and a new central processing unit (CPU). This offers customers a more complete data center server system. The already enormous volume of data center spending is reflected in Nvidia’s quarterly revenue.
But while data center revenues have gone parabolic, another Nvidia business segment is currently operating under investors’ radar. After all, it wasn’t just Nvidia’s R&D advancements that led to the increasing use of generative AI and other artificial intelligence applications.
There are now several companies working to bring self-driving cars to the road or use computing power to improve the performance of existing vehicles. And there are signs that Nvidia’s automotive business could be its next big revenue generator.
Nvidia’s next big catalyst
Although the figures in the automotive segment pale in comparison to data center sales at the moment, there is also a trend increase in turnover there. Sales growth is already underway as automakers work to improve the performance of their vehicles. Manufacturer of electric vehicles (EV). Rivian car industry just announced that it will use Nvidia chips to boost computing power and improve the range and performance of its R1 platform vehicles.
Rivian says it will have ten times more computing power with Nvidia’s DRIVE Orin processors. Nvidia calls its Orin system on a chip the central computer for intelligent vehicles. Other car companies working with Nvidia include Chinese EV manufacturers BYD, NioAnd XPeng. In addition, Volvoits subsidiary North StarAnd Mercedes Benz are among the global automakers using Nvidia’s autonomous driving system.
Self-driving cars could be Nvidia’s next bonanza
This partly explains Nvidia’s recent sales growth in the automotive segment. However, consider what could happen next as more and more self-driving vehicles enter the market. A lot of attention is paid to it Tesla and its plans for robotaxi fleets. It has said it will update investors in August on the progress of its self-driving vehicle efforts. But other companies are one step ahead of the EV leader in autonomous driving and already have vehicles on the road.
Alphabet‘s Waymo is expanding its operations as it trains its systems. In May, the company said it was operating 50,000 rides per week in San Francisco, Los Angeles and Phoenix. Amazon owns the self-driving car company Zoox and has plans to test vehicles in Austin and Miami.
To be sure, regulatory hurdles remain, and data will be needed to prove the technology is safe and beneficial to consumers. But investors who can be patient until that data collection and process plays out could do well to get into Nvidia stock before that sector takes off.
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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Howard Smith has positions in Alphabet, Amazon, BYD Company, Nio, Nvidia, Rivian Automotive, Tesla and XPeng. The Motley Fool holds positions in and recommends Alphabet, Amazon, BYD Company, Nio, Nvidia, and Tesla. The Motley Fool has a disclosure policy.
Prediction: This Will Be Nvidia’s Next Big Move was originally published by The Motley Fool
