Will NVIDIA Stock Surge On Its New $200B CPU Ambitions?
Nvidia CEO Jensen Huang shakes hands with an attendee after the media Q&A session during Nvidia/Japan AI Ecosystem Reception in Tokyo on July 16, 2026. AI-powered robots for use in shipbuilding, the Japanese firm said on July 16 during a visit to Tokyo by the US chip giant’s CEO Jensen Huang. (Photo by Philip FONG / AFP via Getty Images)
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This article was written by Doug Nathman, with research by his team at Trefis.
The company has reduced its commentary regarding the multi-billion-dollar issue related to China that previously dominated their discussions, and what they are focusing on now indicates a substantial change in where the company’s growth must stem from.
With NVIDIA (NVDA) stock still trading close to all-time highs following an impressive 62% surge over the past two years, it’s easy to lose sight of the significance behind record-setting figures. The latest quarter was consistent with this trend, showcasing data center revenue skyrocketing by 92% compared to the previous year. However, the most significant indicator for an investor isn’t always the most pronounced statistic. It’s the issue that was once a major headline matter and has now faded to a mere footnote. For NVIDIA, that issue pertains to China.
The Multi-Billion Dollar Issue That Became Less Visible
Not long ago, dealing with U.S. export regulations concerning its China-specific chips was a key narrative. Management was clear about the financial impact, indicating they were “unable to ship $2.5 billion in H20 revenue during the first quarter” of last year. It was a clearly articulated, significant obstacle. Currently, this topic is less frequently mentioned. The issue remains present; during the latest earnings call, the company acknowledged it is “not forecasting any revenue from China data center compute in our outlook.” The crisis has been addressed by effectively writing off this market. The clamor has subsided, yielding to a serene acceptance of a new reality.
The New $200 Billion Growth Driver Taking Its Place
This calm was facilitated by the vast scope of what NVIDIA is currently emphasizing: CPUs. The company has shifted dramatically, reorienting its future with a significant new initiative. Management is now promoting its Vera CPU, stating it “opens up a completely new $200 billion TAM for NVIDIA, a market we have yet to penetrate.” More specifically, they have announced “visibility to almost $20 billion in total CPU revenue this year.” The focal point has shifted. The narrative has transitioned from defending a struggling GPU market to aggressively pursuing an entirely new one, with the company now aiming to establish itself as the “world’s leading CPU supplier.”
The Silence Has Dual Implications
The evaluation here is mixed but leans towards a reassuring outlook. It is troubling that a substantial growth market was effectively lost, a reality reflected in the company’s overall revenue growth slowing from its three-year average. Losing a market like China comes with consequences. However, the company’s response demonstrates remarkable strategic flexibility. Instead of fixating on the loss, management has introduced a new growth avenue in CPUs that, according to their figures, vastly exceeds the revenue setback. The pivot is bold and ambitious. The critical point to monitor now is the implementation: anticipate the solid figure on CPU revenue next quarter to determine if this new narrative fulfills its multi-billion-dollar potential.
This Is Not The NVIDIA You Thought You Owned
This realization is striking. The NVIDIA you believe you possess, the reigning GPU champion, has subtly transformed into a different investment. It is now a comprehensive systems company whose future growth heavily relies on dominating the CPU market, a transition necessitated by a geopolitical barrier it could no longer surmount. Recognizing that transformation required paying attention to the silence.
And for those interested in the semiconductor sector, rather than being influenced by what one company might not disclose, a semiconductor ETF like SMH provides coverage of that specific industry.
NVDA Has Experienced A 66% Decline From Its Peak Before
When management leaves inquiries unanswered, the uncertainty weighs most heavily on those holding significant amounts of the stock. NVDA has seen a decline of 66% from its peak in the past five years, and a drop of this magnitude feels very different when one position constitutes a large portion of your wealth.