In recent years, Nvidia (NVDA +6.26%) has driven the artificial intelligence (AI) revolution by bringing its graphics processing units (GPUs) to data centers. These are the high-performance chips that fuel the simultaneous and complex calculations needed for tasks such as the training of large language models. And this chip, along with related products and services, has helped the company generate record revenue — it reached more than $215 billion in the latest full year.
It’s also prompted investors to pile into the stock, driving it to a 450% gain over the past three years. At certain moments, though, some investors have worried about Nvidia’s staying power — at least in its position as top AI chip designer and as the world’s biggest company. (Nvidia took that title last year when it soared past $4 trillion in market value; today, it’s surpassed $5 trillion.)
The tech giant, however, may have just offered those investors a reason to let go of those concerns. At the Computex conference in Taiwan today, Nvidia chief Jensen Huang announced something big.
Image source: Getty Images.
Nvidia’s AI chip dominance
As mentioned, Nvidia has built its dominance — and earnings machine — in recent years by serving the data center market with GPUs. These are the major tech giants, as well as other tech companies, that sell access to compute or use it for their own AI projects. This might be, for example, Microsoft‘s cloud business, which offers access to Nvidia chips to its customers, or it may be a customer like Meta Platforms, which uses Nvidia GPUs for its own AI work.
These companies and many others have chosen Nvidia time and time again because this leader offers the fastest GPUs around — this speed may bring the customer’s products to market sooner and result in greater efficiency over time. So even a heftier price tag for Nvidia chips makes the investment worthwhile down the road.
Some investors, however, have worried that increasing competition in the GPU market — with companies such as Amazon, for example, creating and seeing success with their own GPU-style chips — could hurt Nvidia. It’s important to note that, so far, Nvidia has remained ahead due to its focus on innovation, and this continues.
Now, on top of this, Nvidia’s Huang just announced big news — something that could ensure the company’s leadership and even propel it into leadership of a second market. And by doing this, Nvidia is directly taking on several other market giants that have been leaders in this area: from Intel to Advanced Micro Devices.
Reinventing the PC
“Microsoft and Nvidia are going to reinvent the PC,” Huang said during his keynote at Computex. How? The Nvidia chief announced a new processor, the N1X, that’s part of its new RTX Spark superchip for Windows PCs. These Nvidia-powered personal computers, made by Microsoft, Dell, and others, will launch this fall.
An Nvidia spokesperson told CNBC that the new chip will be much more efficient and higher performance than x86 processors. And this makes them perfect for running AI agents, the software that actually puts AI to use. (The x86 is a central processing unit (CPU) architecture launched by Intel many years ago. Nvidia’s chip uses an alternative, an architecture created by Arm Holdings.)
So now, the natural question is: Why is this news such a big deal? For a couple of reasons. First, this is part of Nvidia’s entrance into the CPU market. The company has offered CPUs as part of systems in the past, but it hasn’t been a major player in this space. With the launch of its Vera Rubin platform for data centers, it’s offering a stand-alone CPU for the first time ever. That, alone, is very positive news for Nvidia.
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A massive step for Nvidia
Second, this represents a massive step for Nvidia in the PC market. These initial PCs, at 14 millimeters, will have a relatively high price point and target professionals, gamers, and those seeking very lightweight computers, but the company aims to broaden its reach across various price points in the future, CNBC reported.
During the company’s earnings call last month, Nvidia expressed its intention to dominate the $200 billion CPU market. This move into both CPUs for data centers and CPUs in the PC market could put Nvidia on track to reach this and other goals.
Finally, this comes at just the right time — as AI agents are on track to become the next AI growth driver. This latest move allows Nvidia to benefit from the AI agent opportunity — CPUs are key to powering agents — and potentially become a (or the) leading chip provider for PCs. Nvidia is expanding its revenue growth opportunity, which reduces risk, and all of that makes it an exciting stock to buy and hold at this point in the AI story.
