What’s next for Nvidia once AI growth slows down?
A lot has been written about Nvidia in the last year. The company’s share price has nearly tripled in just over a year.
Investments in AI infrastructure made the company the biggest by market cap at one point.
Even though the share price has corrected from its all-time highs, it is still valued at a market cap of $2.93 trillion, the second largest in the world behind Apple.
All these gains have come on the back of investments in AI infrastructure. Anyone who has Nvidia is their watchlist knows AI is the buzzword that has helped stock prices skyrocket.
Considering the fact that analysts have now started asking questions about ROI on AI investments, it seems future investments in this sector will be highly scrutinized, and therefore limited.
If Nvidia’s sales are about to take a hit because AI investments have peaked, what next for the company? Some are calling robotics the next big thing. But how big will that be in the current context of Nvidia?
What are Nvidia’s plans for robotics?
Nvidia is already active in the robotics segment but we seldom hear about it because of the focus on AI.
Just last month, Nvidia launched a suite of services for robot manufacturers, AI developers, and software companies
The company’s offerings will help other companies train robots, simulate work environments and teach robots based on AI models. Nvidia CEO Jensen Huang firmly believes AI is the next big wave of Robotics.
“The next wave of AI is robotics and one of the most exciting developments is humanoid robots,” said Jensen Huang, founder and CEO of NVIDIA.
We’re advancing the entire NVIDIA robotics stack, opening access for worldwide humanoid developers and companies to use the platforms, acceleration libraries and AI models best suited for their needs.
But as far as investors are concerned, the real question is, is it as big as AI?
How big is the robotics segment for Nvidia?
Nvidia is well-positioned to benefit from the scaling of humanoid robots, whenever that happens.
The company could revolutionize the way factories and warehouses are operated. But let’s look at the numbers to see how big a revolution that could be.
The global robotics market was estimated to be worth $46 billion last year. It is forecasted to grow at 15.1% to reach $170 billion by 2032. This is quite a growth rate and a decent market size.
However, this size pales in comparison to the overall AI market, which stood at over 500 billion dollars last year and is projected to grow at 20.4$ to $2.74 trillion by 2032.
Looking at these numbers, one could argue that even the AI story isn’t finished yet. And venturing into robotics will only help strengthen AI-related revenue streams.
But much of that AI growth is already priced in. Robotics segment, while a considerable addition to Nvidia’s revenue stream, is a good addition. It, however, is never going to have the same effect on the share price as the AI buzz did.
If shareholders are expecting robotics to be the next big thing for Nvidia, that’s unlikely to happen.
However, by perfecting the infrastructure for robotics, Nvidia will be the first beneficiary of the robotics revolution, just like it was for AI.
That should help Nvidia’s stock to keep going up, even if at a slower pace.