Forget Artificial Intelligence (AI): Here Are 143 Billion Reasons to Buy Nvidia Stock Hand Over Fist

There is no denying that artificial intelligence (AI) has been the driving force behind it Nvidiahis (NVDA -4.08%) an amazing stock market rally since the end of 2022, as the rapidly growing adoption of this technology has led to a remarkable increase in the company’s revenue and earnings.

For example, Nvidia’s data center revenue rose 154% in the second quarter of fiscal 2025 to a record $26.3 billion. This segment’s sharp revenue growth was the reason why Nvidia’s total revenue rose 122% year-over-year to $30 billion, crushing Wall Street’s expectations. Even better, the company’s guidance was stronger than what analysts were looking for, but the stock’s price action suggests the market isn’t happy with its numbers and outlook.

AI fatigue may have hit Nvidia

Investors don’t seem too thrilled with Nvidia’s performance last quarter, as the stock has headed south since it announced earnings on August 28. This could be a result of Nvidia expecting to grow “only” 80% last year. year in the current quarter to $32.5 billion.

Of course, the chipmaker’s guidance shows a deceleration from the previous quarter’s reading, but that was inevitable given the massive scale of Nvidia’s business and the revenue it’s already generating. Again, the relatively modest outlook compared to the previous quarter may have raised concerns in the minds of investors that Nvidia’s stunning growth could eventually slow.

On the bright side, the AI ​​chip market looks poised for impressive long-term growth, which could allow Nvidia to maintain healthy growth levels thanks to its dominant position in this market. However, concerns about AI’s ability to deliver enough returns for companies that have poured billions of dollars into the technology appear to be weighing on investors’ minds.

So it’s safe to say that investors and analysts might want something more than AI to help bolster their belief in the company’s long-term growth prospects. That’s where a $143 billion emerging market could come to Nvidia’s rescue — a market that isn’t currently big enough to move the company’s needle, but has the potential to become a key driver of long-term growth.

This massive market could be the company’s next big catalyst

According to market research report aggregator Market.us, the cloud gaming market was worth about $5 billion last year. But this market is expected to witness an impressive annual growth rate of nearly 47% through 2032, generating revenues of $143 billion by the end of the forecast period.

The good news for Nvidia investors is that it is not oblivious to this lucrative opportunity. The company already offers a cloud gaming service known as GeForce Now. While Nvidia doesn’t provide many details about the service and includes its revenue in its gaming segment, it did reveal that GeForce Now had 25 million members last year.

Investors should note that GeForce Now also has a free membership tier, so the number of paid cloud gaming subscribers Nvidia has is unclear. However, according to Market.us, GeForce Now had 9 million users as of last year, and this lower number compared to the service’s total member base likely indicates the number of paid users.

The number of GeForce Now subscribers is larger than the combined user base of PlayStation and Xbox cloud gaming users, according to Market.us. more precisely, SonyPlayStation’s cloud gaming service had 3.6 million subscribers last year, while MicrosoftThe Xbox cloud gaming base was 4.2 million.

For comparison, the research report says the total number of paid cloud gaming subscribers was nearly 30 million last year. Nvidia has therefore cornered 30% of its cloud gaming user base. More importantly, there’s a good chance they’ll convert more of their free members to paid subscribers thanks to a rapidly expanding library.

Nvidia’s management said on its latest earnings conference call that it offers a library of more than 2,000 titles on GeForce Now, which the company claims is “the most content of any cloud gaming service.” But even if Nvidia manages to maintain a 30% share of the cloud gaming market over the next decade, it could take more than $40 billion in revenue from that market, based on the $143 billion market estimate.

However, the average spending of each cloud gaming user is expected to grow impressively in the coming years, according to Statista, jumping from $14 last year to nearly $38 in 2027. So Nvidia could enjoy a higher revenue share of the cloud gaming market in the long term that may exceed its share of users. More importantly, Nvidia has already built a good user base in cloud gaming that it could eventually monetize.

All of this indicates that cloud gaming could become a sizable business for Nvidia in the long term, and it won’t be surprising to see the company generate much higher than the $40 billion estimate. Cloud gaming could give Nvidia’s gaming business a big long-term boost, given that the company generated just over $11.2 billion in revenue from the segment over the past four quarters.

Add in the opportunity for secular growth in the personal computer and digital twin markets, and there are more reasons for investors to remain bullish on Nvidia over the long term, beyond AI. Buying and holding this technology stock for the long term could prove to be a smart move.