02-03-2025
What's Next for Nvidia? Jensen Huang Just Revealed 3 Reasons to Buy the Stock Hand Over Fist.
Nvidia (NASDAQ: NVDA) announced overwhelmingly positive fourth-quarter results last week. However, its shares sank the following day. Should investors be concerned? I don't think so.
Sure, Nvidia's growth is slowing somewhat. The company's future remains bright, though. CEO Jensen Huang just revealed three growth drivers for Nvidia that, in my opinion, translate to reasons to buy the stock hand over fist.
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1. Agentic AI
Huang said in Nvidia's Q4 earnings call, "This is now the beginning of the agentic AI era, and you hear a lot of people talking about it, and we['ve] got some really great things going on." He's right on all three counts, in my view.
Agentic AI involves autonomous AI agents that can make decisions and perform tasks without constant human involvement. 2025 is shaping up to be the year of AI agents. Multiple leading technology companies are investing heavily in agentic AI, including Google parent Alphabet, Meta Platforms, Microsoft, and OpenAI.
Nvidia is already in the thick of agentic AI development. CFO Colette Kress noted in the Q4 call that the company's consumer internet revenue roughly tripled year over year with agentic AI as one of the growth drivers. Huang hinted at major agentic AI advances on the way, saying that Nvidia will "have some really exciting things to share" at its GTC AI Conference scheduled to begin March 17, 2025.
2. Physical AI
While there's a lot of buzz around agentic AI, you probably haven't heard as much about physical AI. However, Huang thinks it's another important part of the next wave of AI that is, in his words, "right around the corner."
Physical AI involves the use of AI technology within physical systems. One good example of physical AI is in robots. Another is self-driving cars. Huang mentioned several other applications of physical AI in Nvidia's Q4 call, including tractors, lawnmowers, buildings, and warehouses.
Nvidia is already a major player in the physical AI market. Kress noted that nearly every autonomous vehicle (AV) company is using Nvidia's infrastructure and software platforms "in the data center, the car, or both." She also highlighted Nvidia's recently announced Cosmos World Foundation Model platform. This platform enables developers to build physical AI systems. Kress mentioned Uber Technologies as one of the early adopters of Cosmos.
Huang also pointed out that many start-up companies are working on physical AI. He said that "each one of them needs a fair amount of computing infrastructure." This, of course, presents a great opportunity for Nvidia as the leader in the GPU market.
3. Sovereign AI
The third component of the next wave predicted by Huang is sovereign AI. What is sovereign AI? It refers to nations building AI systems that they can control using their own data and technology infrastructure.
Huang didn't talk much about sovereign AI in Nvidia's Q4 call. However, he said that the technology, like agentic AI and physical AI, is "barely off the ground." He argued, though, that Nvidia is abreast of what's going on in sovereign AI because it's "in the center of much of this development."
Is that merely hubris from a CEO acting as a cheerleader for his company? Nope. Nvidia truly is at the forefront of many sovereign AI initiatives. For example, French cloud services provider Scaleway is using Nvidia's technology to build Europe's most powerful cloud-based AI supercomputer. India's Tata Group is using the Nvidia GH200 Grace Hopper Superchip to develop a sovereign AI infrastructure. Japan is working with Nvidia to build sovereign AI systems that include public-private partnerships. And those are just a few of the sovereign AI initiatives Nvidia is involved in.
Is Nvidia stock really a great pick because of these growth drivers?
Huang didn't directly say to buy Nvidia stock hand over fist because of the company's agentic AI, physical AI, and sovereign AI opportunities. However, I view all three growth drivers as great reasons to buy the stock right now.
I fully agree with Huang that we're still in the early stages of these areas of AI. I also think Nvidia is in the strongest position of any company to profit from all three components of the next AI wave.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keith Speights has positions in Alphabet, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, Microsoft, Nvidia, and Uber Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
