NVIDIA (NASDAQ:NVDA) has set the stock market on fire this year, remaining a top growth stock even though its financial performance has not been up to scratch. But the graphics specialist is now in the midst of a turnaround, with revenue expected to jump as much as 34% in the current quarter and earnings per share projected to more than double year over year.

Strong growth in the graphics card business will be the primary driver of NVIDIA's turnaround. But this is not the only catalyst that the chipmaker is sitting on. The tech giant's data center business is about to get its act together as well in 2020. Let's see how.

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NVIDIA's big data center opportunity

The data center business is NVIDIA's second-largest source of revenue after the gaming business. It supplies nearly a quarter of the company's total revenue. Not surprisingly, the weakness in recent quarters has contributed to the chipmaker's weak financial performance.

NVIDIA's data center revenue dropped 8% year over year in the third quarter of fiscal 2020. But it showed remarkable recovery on a sequential basis, recording nearly 11% growth. On the latest earnings conference call, NVIDIA credited the increasing adoption of artificial intelligence (AI), which is triggering demand for hyperscale data centers, for this turnaround.

Hyperscale data centers are different from typical ones in the sense that they contain thousands of servers and millions of virtual machines. This makes them capable enough to tackle AI workloads that a typical data center cannot. That's because a typical data center has servers and virtual machines in the hundreds and thousands, respectively.

Given the high volume of data that will be processed to enable AI applications, demand for hyperscale data centers will jump. Third-party estimates tell us that the global AI infrastructure market will clock a compound annual growth rate of over 23% through 2025, while the hyperscale data center market is expected to grow at more than 24% a year through 2024.

NVIDIA is already reaping the benefits of this growth, as its AI inferencing business doubled year over year. Shipments of the company's Tesla T4 GPU (graphics processing unit) that's used in hyperscale data centers for AI inferencing hit a record last quarter.

The good news for NVIDIA investors is that the company looks all set to sustain this momentum into the New Year. The company has struck some lucrative partnerships recently that should help it take advantage of the potential end-market growth on offer.

Making the right moves

Chinese transportation company Didi Chuxing has chosen NVIDIA graphics cards to power cloud computing solutions and to develop an autonomous driving platform. NVIDIA's data center GPUs will train Didi's machine learning algorithms in the back end. On the other hand, NVIDIA's DRIVE autonomous driving platform will help the Chinese company on the inferencing front to power self-driving vehicles.

This partnership could be a big deal for NVIDIA, as Didi is the dominant player in China's ride-sharing market, commanding more than 80% market share. Moreover, China is moving ahead aggressively as far as self-driving car development is concerned. Shanghai opened a dedicated zone for testing autonomous cars in July this year where around 200 vehicles have been tested already.

More importantly, the Chinese population seems to be welcoming self-driving cars. A Deloitte study found that only 26% of people in the country deem autonomous vehicles to be unsafe, much lower than the reading of 47% in the U.S. This is the reason why Didi Chuxing is aggressively looking to roll out a self-driving ride-hailing service within the next two years, and this could give NVIDIA a nice shot in the arm.

Meanwhile, Chinese e-commerce specialist Alibaba (NYSE:BABA) is also deploying NVIDIA's data center chips to improve sales. NVIDIA pointed out in a press release that its T4 GPUs and other components helped Alibaba deliver relevant recommendations to users during the company's Singles Day sales event in November:

The platform's intuitive search capabilities and reliable recommendations allow us to support a model six times more complex than in the past, which has driven a 10% improvement in click-through rate. Our largest model shows 100 times higher throughput with T4 compared to CPU.

In fact, NVIDIA claims that the T4 GPUs bolstered Alibaba's recommendation algorithm and helped it deliver 780 queries every second. That's a massive jump from just three queries per second delivered by central processing units.

As such, it won't be surprising to see NVIDIA's data center chips being deployed by more e-commerce giants across the globe and paving the way for stronger growth in this segment.

It can be said that NVIDIA is sitting on a massive opportunity in the data center market, and it is pulling the right strings to take advantage of it. Its data center revenue has already started picking up the pace, and it could clock impressive growth next year. This should pave the way for strong financial growth at NVIDIA and help the stock sustain its growth momentum in the New Year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.