Nvidia (NVDA +2.06%) already has soared in the first stages of the artificial intelligence (AI) story. The company designs the most sought-after graphic processing units (GPUs), or chips that power crucial AI tasks, like the training and inferencing of models. Nvidia's GPUs take the No. 1 spot in the industry because they're the fastest around, helping customers save time and, eventually, money.
Thanks to this position, Nvidia has generated double-digit and triple-digit growth in recent quarters, with revenue reaching record levels. And it's resulted in great gains for the shares -- the stock soared 171% last year after already rising 238% in 2023.
After this fantastic performance, though, some investors may wonder if there's much growth potential left for Nvidia. My prediction is that Nvidia's AI success might just be getting started, and one AI development, in particular, which is taking shape right now will represent a once-in-a-generation opportunity for the tech giant.
This could lead to major growth in earnings and share price over the long term. Below, I'll take a closer look at this potential billion-dollar growth driver.
Image source: Getty Images.
Nvidia's biggest business
First, here's a quick summary of Nvidia's path so far. Several years ago, the company's GPUs were most known for powering the lively graphics in video games -- and they still do, generating more than $3 billion in revenue from this industry in the recent quarter. But the ability of these chips to process many tasks at once made them ideal for other uses and industries, too, particularly AI. In recent years, AI has become Nvidia's biggest business, bringing in a record $30 billion in revenue in the latest quarter.
Nvidia hasn't stuck to just GPUs. It's built an AI empire, offering software, networking tools, and other elements to make itself the go-to place for all that is AI. This is a wise choice, considering analysts forecast today's $200 billion AI market may reach more than $1 trillion by the end of the decade.
It's also important to keep in mind that Nvidia is ensuring its leadership in the AI world by a commitment to innovation. The company has pledged to update its GPUs on an annual basis and make its new innovations compatible with earlier ones. This way, customers can build on the Nvidia systems they already have, rather than starting from scratch with each new GPU release, for example.
AI agents for complex problems
Let's move on to my prediction. One AI development, in particular, could represent a once-in-a-generation opportunity for Nvidia, and this is the creation of agentic AI.
These AI agents, rather than answering one simple question, have the ability to tackle complex problems. They gather data from various sources, and powered by a large language model (LLM), "reason" to find a solution. Then, the AI agent will carry out the particular task. These agents even get better and better as time goes by because data from each interaction is fed back into them.
Nvidia plays a key role in the business of agentic AI, offering developers tools to build and deploy such agents. The company has worked with partners to create blueprints for developers that integrate with Nvidia's Enterprise software platform -- Nvidia spoke of five blueprints during the CES this week in Las Vegas.
The AI giant also announced its own AI blueprint for video summarization, allowing developers to create agents that can analyze huge quantities of video content. In an industrial setting, a video analysis AI agent could help increase productivity or improve safety -- to mention just a couple of uses. And in sports, this AI agent could help pro athletes better assess their performances and make improvements.
NASDAQ: NVDA
Key Data Points
A "gigantic" opportunity, Jensen Huang says
This sounds great -- but why will agentic AI represent a once-in-a-generation opportunity for Nvidia? As mentioned, the tech giant already plays the leading role in the powering of AI. Now, with agentic AI, Nvidia gets to play a big role in the general use of AI, and this might represent major growth considering the many ways AI agents could serve companies and industries.
Nvidia CEO Jensen Huang even said the opportunity for AI agents will be "gigantic," according to a report in VentureBeat last year. Designing tools needed to build these agents could be a significant opportunity for Nvidia -- and one that doesn't come around often.
Some numbers support the idea, too. About 25% of companies using generative AI will launch AI agent pilots this year, and that will increase to 50% by 2027, Deloitte forecasts. At a compound annual growth rate of 19%, the agentic AI market is expected to reach more than $48 billion by 2032, according to DataIntelo.
Now that companies are starting to put AI to use, agentic AI may gain momentum. As this happens, Nvidia should be one of the first to benefit. My prediction is, even after Nvidia's gains over the past two years, the company's growth may be far from over. That makes right now a fantastic time to buy and hold onto Nvidia stock.
