Not the GPUs. This Overlooked Piece of Nvidia's Business Could Matter Most for the Stock's Next Leg Up.

Nvidia (NVDA +1.68%) has built an artificial intelligence (AI) empire thanks to its strength in one particular area: the graphics processing unit (GPU). These powerful chips have been the crucial tool that’s fueled the development and use of AI so far. Researchers and companies use the GPU for key tasks such as the training of AI models and the inferencing process, as these models are actually put to work.

All of this has resulted in soaring earnings for Nvidia every quarter over the past few years. And investors piled into the stock as it climbed 400% over three years — and demand for GPUs continued to soar.

This year, Nvidia stock has advanced, but at a more moderate pace. It’s heading for a 20% annual gain. Moving forward, the GPU may not be the biggest catalyst for stock performance. Instead, the following overlooked piece of Nvidia’s business could matter most for the stock’s next wave of growth. Let’s check it out.

A specialist in GPUs

First, though, let’s take a closer look at Nvidia’s path so far. The company, founded more than 30 years ago, started as a specialist in the GPU, primarily serving the video gaming market. Progressively realizing the GPU’s potential to address other areas, Nvidia created the parallel computing platform, CUDA, in 2006 — and that set the stage for its participation in the AI market in recent years.

This proved to be a game-changing move for Nvidia as it transformed the company’s revenue opportunity. We can see this in the chart below.

NVDA Revenue (Annual) data by YCharts

Nvidia hasn’t stuck with GPUs only and instead broadened its capabilities, offering complete systems and elements like networking tools and enterprise software. The company even developed platforms tailored to the needs of specific industries, such as drug development, and is facilitating progress in hybrid quantum-classical computing.

Earnings continue to soar, with revenue rising 100% to $96 billion in the recent quarter, and profit also climbing in the triple digits to reach $59 billion.

Now, let’s consider the overlooked Nvidia business that could offer the next catalyst for stock performance. This is a rather new Nvidia endeavor, focusing on an element that could drive the next stage of AI growth. I’m talking about the central processing unit (CPU), or the main chip used in all computers.

A new business for Nvidia

In the past, Nvidia wasn’t a major player in the CPU market. Intel and Advanced Micro Devices were and still are the leaders in this space. As for Nvidia, it developed CPUs to be used as part of its GPU systems — not as stand-alone chips.

Now, with Nvidia’s latest release — the Vera Rubin platform — the company is introducing its first-ever stand-alone CPU. Nvidia says this is to address a $200 billion market opportunity, and the company already expects $20 billion in CPU sales this year. Considering the Rubin platform just started shipping in recent weeks and only a few months are left in the year, this is a significant figure.

Nvidia also hasn’t kept its ambitions quiet. The company says it aims to lead in this high-potential market. Why is Nvidia so interested in CPUs at this point? This chip is a key element needed to power agentic AI. As AI agents carry out tasks on behalf of humans, the CPU is the chip working behind the scenes. So, to put it another way, the CPU is to agentic AI as the GPU is to AI training.

Agentic AI is viewed as the next growth driver in the AI story, as it puts AI to use to address real-world needs. This could be big for companies like Nvidia that provide essential tools such as chips, because demand will remain strong as AI is applied to various situations and problems over time.

So, as Nvidia aims to be the leader in the GPU and the CPU markets, its progress in CPUs could supercharge growth — and lead to the next leg up in stock performance.