Nvidia (NVDA -1.99%) is expanding further into the artificial intelligence (AI) space. In early November, the company announced the launch of a platform to create AI avatars called Omniverse Avatar. What do investors need to know about it? In this segment of Backstage Pass, recorded on Nov. 19, Fool contributors Toby Bordelon and Nick Rossolillo hit the highlights of Nvidia's newest technology platform.
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Toby Bordelon: Nick, I wonder if you have any thoughts on this question of the avatars that Robin had for Nvidia, if you can talk about that a little bit.
Nicholas Rossolillo: Yes. Jensen Huang, the CEO and co-founder [of Nvidia], talked about this extensively in his keynote last week at their GTC conference, and then provided some comments during the earnings call this week. This a really, really big deal.
I think some people have started to figure out that Nvidia is building this very powerful software business on top of its hardware design business for the last year. But this is like that moment I think where everybody is now like, oh, wow, this is happening.
Omniverse, obviously, they came up with this idea to help build the metaverse. It predates Facebook's rebrand [as Meta Platforms], but the Avatar product is one tool set within the Omniverse suite, and it's on a licensing model. So this is no longer like earning money from chip sales anymore, it's a software licensing business. Jensen, on the call the other day, someone asked him about it. Basically, it's about a $1,000-per-year licensing model.
Basically, how it's going to work is, each avatar is going to be considered like a user, like a human user would be considered a user for a software product. Nvidia thinks that they could have 40 million users at some point in the future. 40 million.
The idea is, you go to a restaurant kiosk. You were talking about the start-up, that's trying to raise money, the automation of the restaurant, you go to the kiosk, there's this Omniverse-based avatar that greets you, takes your order, sends it back to the robot in the kitchen. That's a user. Your car has a digital interface, that's a user.
You might buck at first about 40-million user number, but then you start thinking about what they are actually working on and the pain points that might help solve across all sorts of sectors of the economy. It's a pretty big deal: 40 million users on a $1,000-per-year contractual basis, we're talking about massive revenue streams here.
Toby Bordelon: That's lot of money.
Nicholas Rossolillo: Just for a one product in the entire suite of products.
Toby Bordelon: That's a lot of money. We have 40 million users, you said?
Nicholas Rossolillo: That's the number that Nvidia is throwing out.
Toby Bordelon: 40 million users, $1,000, is $40 billion.
Nicholas Rossolillo: We're talking eventually down the road.
Toby Bordelon: Right. Not next year, right?
Nicholas Rossolillo: Yeah. I think what's so mind-blowing is that that's just one of the tools in Omniverse.
Toby Bordelon: Clear potential. I want to see if it's realized. But you can certainly see why people might get a little excited [laughs] when you just look at those numbers.
