As the market eagerly awaits earnings from artificial intelligence (AI) powerhouse Nvidia (NVDA -2.09%), investors will be happy to hear that the company's CEO, Jensen Huang, has announced a new partnership with Lenovo that will accelerate sales in a key area: enterprise.
A critical piece of the pie
The lion's share of Nvidia's revenue is derived from companies like Microsoft, Meta Platforms, and Amazon. The tech giants use its hardware to build gargantuan server farms that run their consumer-facing AI products like Gemini and Meta AI. These companies have poured billions of dollars into Nvidia's coffers and have no plans to stop in the near future. While they are great customers to have, there is always risk in relying on a relatively small customer base. Any one of them could decide to switch to another provider, like AMD, or develop their own chips in-house, as many are reported to be doing. Nvidia would be smart to greatly expand its reach beyond them.
That seems to be the aim of Nvidia's partnership with Lenovo. The two companies are teaming up to create a new platform called "Lenovo Hybrid AI Advantage with Nvidia," aimed at enterprise clients of all sizes, large and small. It is essentially a custom AI solution tailored to each individual business. If Huang's promise holds true, it will help businesses vastly improve their efficiency and, most importantly, their profitability.
Given that this platform will be comprised of Nvidia products at every level -- from its flagship Blackwell chips to its networking hardware to its custom software -- the platform could be a boon to Nvidia's bottom line if it takes off.
Agentic AI is the future
A key component here is what is known as "agentic AI." Up to this point, the generative AI we've seen is great at creating content, analyzing content, and relies heavily on direct human guidance. Agentic AI, on the other hand, can reason in more complex environments, and, critically, it can actually do things. Think of an AI marketing tool that could not only craft a whole marketing plan and the creative materials involved, but also deploy it across the company's media channels. It could continue to monitor the campaign, adjusting it in real time to be more effective.
The platform Nvidia and Lenovo are launching will focus on providing this sort of agentic AI. The possibilities for increased efficiency and cost-cutting are pretty profound, making it an extremely valuable product and a real potential moneymaker for Nvidia.
The year ahead looks promising
The product's success will be directly tied to agentic AI being able to deliver the value it promises to. If it does, this could be a massive new chapter in the AI story.
The good news for Nvidia investors is that it doesn't need this to take off in a major way right now. Nvidia is still seeing massive growth from the sale of its flagship AI chips. The demand isn't slowing down. Although the current round of earnings calls has left some big tech investors nervous about the massive capital expenditures being spent on AI infrastructure, there's no indication the spending will be shrinking anytime soon. Nvidia's newest Blackwell chip hasn't even been released, yet it has already sold out for more than a year.
While AMD is still behind in its offerings, the technology gap is shrinking, and competition is heating up. Nvidia may soon face pricing pressure from rival offerings and if it cannot fill orders for extended periods, customers could begin looking elsewhere. Still, I think any serious threat is some ways off and Nvidia is in a great position to defend its position. For the time being, Nvidia is still on top.
