Nvidia: Pioneering the Future of AI and Robotics

In 1993, Nvidia (NASDAQ: NVDA) was founded by Jensen Huang, who has led the company as CEO and president since its inception. Over the years, Nvidia has made significant advancements in technology, notably creating the graphics processing unit (GPU) in 1999, a major milestone in its history.

Nvidia’s GPUs have become essential for rendering high-quality graphics in 3D design and gaming. Recently, their chips have found a new application in data centers, particularly in training large language models and facilitating generative artificial intelligence projects.

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Last week, Huang delivered an insightful keynote at CES 2025 in Las Vegas, an annual event showcasing cutting-edge technological innovations. His presentation emphasized that Nvidia’s future offerings remain rich in potential.

The Rise of Generative AI

The surge in Wall Street’s interest in generative artificial intelligence began with the introduction of ChatGPT in late 2022. This innovative conversational tool became widely popular, sparking a dramatic rise in the demand for Nvidia GPUs. The company has enjoyed triple-digit earnings growth over the past six quarters, with its share price soaring 840% in two years.

Some investors express concern that generative AI might be a fleeting trend or a market bubble; however, the reality suggests otherwise. Just as the internet has become an integral part of modern life, artificial intelligence is poised to do the same. The current generative AI boom represents only the initial stage of an ongoing technological revolution, positioning Nvidia firmly at its core.

Advancements in Physical AI

During his CES presentation, Huang highlighted, “The next frontier of AI is physical AI.” Unlike generative AI, which creates and interprets media, physical AI will enable machines to understand and interact with the world around them. Initially, autonomous vehicles are likely to be the first intelligent machines most people encounter.

Nvidia is well-equipped for this shift, as it provides solutions across all three levels of the autonomous vehicle technology stack. Its GPUs deliver the computational power required for training AI models, the Drive platform offers necessary software tools for developing self-driving applications, and the AGX systems supply the in-vehicle computing capabilities for navigation.

In a recent discussion with Yahoo Finance, Huang projected that Nvidia’s autonomous driving segment might achieve a revenue run rate of $5 billion this year, a substantial increase from $1.8 billion last quarter. Although the automotive sector is currently the smallest for Nvidia, this is expected to change, particularly as Citigroup predicts a fivefold growth in autonomous vehicles by 2030 and a fourteenfold increase by 2035.

Image source: Getty Images.

Nvidia’s Leadership in AI Robotics

At CES, Huang remarked, “The ChatGPT moment for robotics is coming.” He introduced Cosmos, a set of pretrained models for robotics development. He emphasized that Nvidia also addresses all three levels of the robotics technology stack.

Nvidia’s GPUs provide the computational backing for training robotics models, while the Isaac platform offers libraries and pretrained models tailored for various robotic applications, such as industrial arms and autonomous mobile robots. Moreover, Isaac serves as a simulation tool, aiding in synthetic data generation and model evaluation.

Finally, Nvidia’s Jetson embedded systems combine GPUs, CPUs, and memory on a single platform, delivering the processing power needed for robots to effectively operate in the real world. Nvidia’s strategic positioning suggests it stands to gain significantly as the AI landscape evolves into robotics, with Citigroup estimating total spending on robotics could exceed $200 billion by 2035 and reach $1 trillion by 2040.

Nvidia Stock Valuation: An Attractive Opportunity

Many view Nvidia as an expensive stock due to its remarkable 840% return over the last two years. However, it currently trades at 55 times earnings, a relatively reasonable figure given Wall Street’s projection of 38% annual earnings growth over the next three years, resulting in a price-to-earnings-to-growth (PEG) ratio of 1.4.

Two years ago, shares traded at 63 times earnings, with expectations of just 22% earnings growth, reflecting a higher PEG ratio of 2.9.

This suggests that Nvidia stock is more affordable now compared to before the generative AI surge. With growth prospects in autonomous driving and robotics emphasized by Huang at CES, Nvidia remains a solid long-term investment choice.

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Citigroup is an advertising partner of Motley Fool Money. Trevor Jennewine has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.