Three years ago, Nvidia (NASDAQ: NVDA) generated impressive profits while riding the wave of the rapidly growing artificial intelligence (AI) market. However, the bears argue that at some point, demand for the company’s chips will cool, and the tech giant will be one of the companies to get a major overhaul as the AI bubble bursts.
That may not be the case anytime soon, however. Nvidia CEO Jensen Huang continues to be optimistic about the future of AI, and recently said something that suggests demand for the company’s chips won’t slow down; quite the opposite. Here’s what investors should know.
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Nvidia’s data center segment makes up the majority of its revenue and has been the main driver of sales growth over the past few years. In the fourth quarter of fiscal year 2026, ending Jan. 25, total revenue reached $68.1 billion, up 73% year-on-year. Data center revenue was $62.3 billion (or 91% of the top line total), up 75% year over year, driven by increased demand for AI chips. Here’s the problem, if there is one: Nvidia itself says its revenue is concentrated in a few customers.
In fiscal year 2026, one of its direct customers accounted for 22% of total revenue, while the other accounted for 14%. It didn’t say where it is, but we can try to guess: It might be one of the leading cloud computing players, like Amazon or Microsoft. Whoever it is, though, what happens if they drastically reduce this investment in AI chips? Nvidia’s revenue will drop significantly. Don’t worry. Huang doesn’t believe that will happen. Here’s what he said during Nvidia’s fourth-quarter earnings call:
We have now seen the use of agent AI and the usefulness of agents around the world and businesses everywhere.
Agentic AI refers to AI tools that don’t just respond to information like AI chatbots do. Instead, they independently discover and use steps to achieve a goal. Huang thinks agent AI will find applications in all sectors and industries, and believes it could be a multi-billion dollar opportunity. AI agents are more complex and sophisticated than chatbots, which means they require more computing power to train them.
In other words, the agent’s AI revolution, which we have now reached, according to Huang, will drive greater demand for the company’s products. Therefore, businesses will continue to spend more on Nvidia’s AI chips, allowing the tech giant to continue to generate strong revenue and earnings, as it has done in recent years. If Huang is right, it’s good news for investors, except for bears, as it means there’s still time to get in on the action and buy the company’s shares.
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Prosper Junior Bakiny has positions in Amazon and Nvidia. The Motley Fool has positions and recommends Amazon, Microsoft, and Nvidia. The Motley Fool has a policy of disclosure.
Jensen Huang Just Delivered Good News for Nvidia Investors was originally published by The Motley Fool.
