Nvidia (NVDA 2.96%), thanks to its ability to supercharge the development and use of artificial intelligence (AI), has become a giant in the world of data centers. These are the places where AI unfolds, from the training of models to the act of putting them to work. AI customers may use graphics processing units (GPUs) from a variety of companies -- and some players have even developed their own chips – but those of Nvidia remain the most powerful.
The AI giant has stayed ahead by getting into the market early and regularly updating its chips and architecture. Its latest development is the Blackwell system, offering a whole ecosystem of products, from chips to networking solutions. All of this helped Blackwell deliver $11 billion in revenue during its first quarter of commercialization -- that was in the fourth quarter of last year. And demand remains strong with Blackwell data center revenue advancing 17% in the latest quarter from the previous three-month period.
So, there's reason to believe that Blackwell will be Nvidia's hottest ticket in 2026, leading to its next update, the Rubin platform -- set for release late next year. All of this is fantastic, but another opportunity could be even bigger in the long run. Let's check it out.
Image source: Getty Images.
Nvidia's record revenue
As mentioned, Nvidia's business in the data center market has exploded higher, and that's help push revenue to record levels. I'm talking about gains quarter after quarter in at least the double-digits and well into the billions of dollars. And Nvidia finished the latest fiscal year with a triple-digit increase in revenue to more than $130 billion.
Considering AI infrastructure spending is going strong, and Nvidia chief Jensen Huang even predicted it would reach $3 trillion to $4 trillion by the end of the decade, this momentum could continue.
But, over time, the opportunity that could be even bigger is the following: telecommunications. Nvidia just took its first major step into this area through a partnership with telecom giant Nokia. As part of the deal, Nokia will use a specially developed Nvidia product to upgrade current base stations for 6G -- and this Nvidia product eventually will become Nokia's base station. (These stations serve as the main point of connection for communications devices.)
This product is Nvidia ARC, an aerial radio network computer. Involving a variety of Nvidia components, from central processing units to GPUs and networking tools, this programmable computer will use AI to improve the efficiency and quality of telecommunications.
NASDAQ: NVDA
Key Data Points
A $200 billion market
The radio access network (RAN) market -- the one Nvidia now is targeting -- may reach $200 billion by the end of the decade, according to Omdia research. So, this could be an important market for Nvidia.
On top of this, Nvidia's role in the telecom market should lead to telecom infrastructure that's ready to support AI-based products of the future that will require high-powered connectivity and performance. So, Nvidia is helping to build out a system that will support devices running on its GPUs farther down the road.
And, considering Nvidia's innovation and readiness to expand into new markets, this deal with Nokia may lead to additional revenue opportunities for Nvidia in the telecom market, one that's worth about $3 trillion.
Finally, the telecom market could be massive for Nvidia as it is one the entire world relies on and can't be paused. So, even if other areas of AI experience a slowdown at some point in the future, it's likely AI-driven telecom infrastructure would continue to advance. So Nvidia's partnership with Nokia not only represents a great AI growth opportunity, but it also may reduce risk -- and this offers the company and investors some security.
There's reason to be optimistic about Blackwell, Rubin, and other chip and architecture updates to drive Nvidia's revenue in the quarters and then years to come. But, over time, Nvidia's step into telecom could represent the biggest win of all.
