Nvidia (NVDA -1.15%) recently reported another blowout quarter. After guiding investors to expect revenue in its fiscal 2025 third quarter to be around $32.5 billion, the leading artificial intelligence (AI) company reported record quarterly sales of $35.1 billion for the period ended Oct. 27.
Exceeding expectations has become the norm, though, as AI capital spending continues to grow. Analysts had already baked in another big quarter, and Nvidia stock reflects much future success. Nvidia shares have dropped by about 7% since the fiscal third-quarter report even after some very bullish comments from Nvidia CEO Jensen Huang during the earnings conference call.
But it was comments he made the week before Nvidia’s earnings report that should have investors most excited to own the stock. Huang was in Japan for an AI summit on Nov. 12, and he laid out a future vision that provides investors a clear picture of why it’s not too late to buy Nvidia stock.
The real AI future
While answering questions during the earnings call on Nov. 20, Huang addressed reports on manufacturing and quality-related issues for its latest Blackwell AI architecture. Blackwell’s success is critical for Nvidia heading into next year. Huang delivered some great news on that front:
Blackwell production is in full steam. In fact … we will deliver this quarter more Blackwells than we had previously estimated. It is the case that demand exceeds our supply.
When Huang was at an AI summit in Japan with SoftBank CEO Masayoshi Son the week prior, though, he laid out just how pervasive he expects Blackwell and Nvidia’s other AI-related platforms to be.
Huang and Son have a history together. In fact, Huang half-joked during the fireside chat that Son “wanted to lend me money to buy Nvidia — all of it.” “Now I regret not taking you up,” he said to Son, adding, “That was a great idea.” Son said that offer was made in 2016 shortly after SoftBank acquired semiconductor chip designer Arm Holdings for $32 billion. SoftBank still owns 90% of Arm after taking it public again in 2023.
Big news from Jensen Huang
The Nvidia CEO made an even more important revelation at the summit. He proclaimed: “Today we’re announcing that we’re partnering with SoftBank to bring and to build an AI infrastructure for Japan. Together we’re going to build Japan’s largest AI factory … out of Nvidia DGX.”
Nvidia DGX is the company’s AI enterprise platform. The company describes it as its “software, infrastructure, and expertise in a modern, unified AI development solution.” It essentially is the enterprise platform where the AI rubber meets the road.
SoftBank will integrate the Nvidia technology to add intelligence to its telecommunications network beyond just voice, data, and video. It will be distributed across the 200,000 SoftBank sites in Japan.
It plans to add an “AI store” to make AI available to 55 million SoftBank customers. All built on top of Nvidia’s AI enterprise. The result will be an “AI grid” that will run across Japan. Huang called it “completely revolutionary.” “This is the first of its kind to transform the telecommunications network, the communications network, into an AI network,” he said.
Nvidia’s bull case
This is an example of how Nvidia’s business can maintain its growth momentum. The applications are endless. From customer service to helping to manage and control a network of self-driving cars.
Huang presented an example where entire factories could become an AI system using cameras and large language models. Managers can “talk” to the factory about what’s happening, whether anything at the site is abnormal, if there were any accidents, or just to get daily reports. The concept could also expand to other physical objects such as a road, a stadium, an office, or a building.
Investors wondering if Nvidia stock has already marched too high should consider the potential gains that could come from enterprise AI. This next phase is already underway. Nvidia CFO Colette Kress told investors during the quarterly call that the company shipped its first Blackwell DGX engineering samples to artificial intelligence development company OpenAI.
The optimism from Huang regarding his company’s future is understandable. These AI collaboration projects are only going to grow. Any investors with a portfolio that includes a growth segment should want to have Nvidia as part of that.