At this point, artificial intelligence (AI) has been discussed enough for investors to know it's a big deal. The explosive growth in Nvidia's (NVDA -2.09%) business results and its stock price prove the point.
But unless you're closely following Nvidia CEO Jensen Huang, you may not comprehend just how big AI can get. Huang has used the term "sovereign AI" in past discussions. He just gave investors a look at what it really means and why it is great news for Nvidia shareholders.
Image source: Getty Images.
Huang just met with the prime ministers of Thailand and Vietnam on a trip to Southeast Asia in early December. He wants to help countries in the region -- and around the world -- utilize domestic data and labor, along with expanding computing infrastructure, to develop and exploit AI. And the market looks to be massive.
Unparalleled growth
It's hard to imagine that Nvidia can continue on its astounding growth path. Sales exploded in the current fiscal year. Over the past nine months, Nvidia reported revenue of $91.2 billion. That's an increase of 135% over the $38.8 billion reported in the prior year period. It's more than quadruple the sales from two years ago.
Most of that is due to Nvidia's data center segment, as big tech companies are spending large amounts of capital to quickly meet the computing power that is needed for AI applications. Of course, investors have noticed, and the stock has also exploded higher, with a three-year gain of 340%.
One would think that the growth rate will eventually drop, but Nvidia is still capacity-constrained with demand still growing. Nvidia is also working to hold off competition with its Blackwell GPU (graphics processing units) architecture launch this year and is already announcing the Rubin platform to succeed Blackwell. Explaining the company's development plans, Huang has stated, "Our company has a one-year rhythm. Our basic philosophy is very simple: Build the entire data center scale, disaggregate and sell to [customers] parts on a one-year rhythm, and push everything to technology limits."
And Huang knows demand is going to spread beyond the large tech companies. That's where sovereign AI comes in, and that is why Huang has been traveling the globe in recent months.
A $20 trillion market
Huang's recent Southeast Asia trip kicked off with a meeting with Thailand's prime minister. They discussed how investing in AI can propel innovation in the country in many fields that will benefit Thai citizens. Huang promoted sovereign AI for Thailand this way:
The most important part of artificial intelligence is the data. And the data of Thailand belongs to the Thai people. The digital data of Thailand encodes the knowledge, the history, the culture, the common sense of your people. It should be harvested by your people.
And that applies to many countries. A recent paper published by the global market intelligence and data provider International Data Corporation (IDC) says that AI will contribute $19.9 trillion to the global economy just through the remainder of this decade. By 2030, it is believed 3.5% of global GDP will be driven by AI investments.
Nvidia boots on the ground
Nvidia is leading the way, not just with its market-leading AI platform offerings. Huang's visit to Southeast Asia had some concrete takeaways. He announced that Nvidia would be opening a new research and development (R&D) center in Vietnam to accelerate AI development.
The center plans to nurture innovation in several sectors of the fast-growing economy. Huang says it will partner with Vietnamese researchers, start-ups, and other business organizations. The country is not new to Nvidia. The company says it has been investing in Vietnam's technology ecosystem for eight years. That includes engaging with dozens of AI start-up companies and universities in the country.
Investors should be paying attention to what Huang is saying and doing. His recent visit to Southeast Asia provides somewhat of a blueprint for how capital investments in AI will continue to grow. That should continue to make Nvidia shareholders happy in coming months and years.
