Nvidia Is Making a Lot of Money Selling Artificial Intelligence (AI) Chips, but You May Be Surprised About How Much It Could Make From This Traditional Market

Nvidia (NASDAQ: NVDA) stock’s stunning rally since the beginning of 2023 was primarily driven by the rapid growth of the company’s data center business, which benefited from the booming demand for its artificial intelligence (AI) graphics cards.

In the company’s recently concluded fiscal year 2024 (which ended on Jan. 28), the data center business produced a record $47.5 billion in revenue, accounting for 79% of its top line. That was a massive increase of 217% from the year-ago period.

The data center business recorded a much stronger year-over-year increase of 409% in revenue to $18.4 billion in fiscal Q4, significantly outpacing the segment’s annual growth.

This suggests Nvidia’s data center business is still gaining momentum, which also explains why the company’s outlook for the current quarter was well ahead of consensus estimates. Nvidia expects revenue of $24 billion in the first quarter of fiscal 2025, which would be a 233% increase from the year-ago period.

Given that Nvidia relies on sales of chips that are being deployed in data centers for AI training and inference purposes, it can be easily concluded that this business segment can continue to be a major catalyst for the company.

However, investors shouldn’t ignore the progress Nvidia is making in its second-largest business segment — which was originally the company’s bread and butter before AI arrived — as it has the potential to supercharge the company’s already impressive growth.

Nvidia’s gaming business is set to jump significantly thanks to AI

Nvidia brought major innovation to personal computers (PCs) in 1999 when it introduced what it calls the world’s first graphics processing unit (GPU), an additional processor tacked on to a PC’s motherboard for running graphics-intensive workloads such as video games.

Nvidia’s GPU technology evolved over the years, and it is now being used in multiple industries ranging from automotive to digital twins to AI. But at the same time, the company continues to be a…