On the surface, that Meta Platforms (NASDAQ:META) was going to spend approximately $38.5 billion in 2024 on AI infrastructure was very good news for Nvidia (NASDAQ:NVDA) stock.
“Meta is one of Nvidia’s top customers. In January, Meta CEO Mark Zuckerberg pledged that his company would have 350,000 Nvidia H100 graphics processing units and a total of nearly 600,000 H100 compute equivalent GPUs by the end of this year,” wrote Barron’s contributors Adam Clark and Tae Kim on Aug. 1.
The authors quoted Anthropic CEO Dario Amodie, who has suggested future generations of AI models will cost between $10 billion and $100 billion.
That’s good news for Nvidia stock, right? Maybe.
While it’s hard to imagine the world turning its back on AI at this point, you are starting to see more doubting Thomases about the technology and its usefulness.
Which begs the question: What is the downside for Nvidia stock if AI doesn’t stick?
What If AI Disappeared?
There is no question that if the tech gods could turn off the AI switch tomorrow, Nvidia stock would not be trading in triple digits for very long.
In Q1 2025, its data center revenue, which is primarily AI-driven, had revenue of $22.6 billion, accounting for 87% overall, growing by 23% on a sequential basis from Q4 2024. Most companies would be happy with a 26% year-over-year increase. That’s a lot of revenue to lose.
Can we live without AI?
AI has been a part of our world since 1950, when the Turing Test was created by mathematician and computer scientist Alan Turing. The test was meant to identify if a computer could be mistaken for a human.
“The test subjects, a person and a computer program, are hidden. The judge has a conversation with both parties and attempts to identify which is the human and which is the computer based on the quality of their conversation. Turing concludes that if the judge can’t tell the difference, the computer has succeeded in demonstrating human intelligence. That is, it can think,” Investopedia writes.
So, even though Nvidia CEO Jensen Huang has been focused on AI since 2006, when he began marketing GPUs (graphics processing units) to the supercomputing community; AI had been around in one form or another for 56 years before Huang got involved.
It’s unlikely to go away entirely.
Nvidia Has Other Irons in the Fire
Nvidia has two reportable segments: Compute & Networking, which includes its data center revenue and AI, and Graphics, which accounts for 13% of its overall revenue.
That is then broken down into four businesses: Gaming (77% of graphics revenue), Professional Visualization (12%), Automotive (9%), and OEM and Other (2%).
In Q1 2025, all four businesses in the Graphics segment grew revenues year-over-year, with the largest, Gaming, 18% higher than a year ago, to $2.65 billion.
The largest percentage increase was 45% from the Professional Visualization group. Right there are two areas the company could allocate more capital should the use of AI slow down or disappear altogether.
As the company said in its Q1 2025 presentation, it has experienced strong demand for its GeForce RTX 40 Super GPU.
Especially popular with PC gamers is the GeForce RTX 4070 GPU, which is said to be experiencing supply issues. While that’s not good, the line of GPUs is evidence the company has other irons in the fire beyond AI.
Huang Has the Vision to Stay Ahead of the Crowd
The one thing I’m not concerned about is CEO Jensen Huang losing his vision for the future of his company and the tech industry. He’s one of the best CEOs in the country.
One area where Huang leads Nvidia is robotics. The CEO spoke about it at Computex 2024 in June.
“The era of robotics has arrived. Everything that moves will one day be autonomous. We are working to accelerate generative physical AI by advancing the NVIDIA robotics stack, including Omniverse for simulation applications, Project GR00T humanoid foundation models, and the Jetson Thor robotics computer,” Cyber News Centre reported Huang’s comments.
Now, I realize he mentions generative AI helping advance the robotics tech stack, but it’s the vision that matters, with or without AI.
In my opinion, he’s the Wayne Gretzky of tech. He goes where tech is going to be, not where it’s been.
Nvidia remains a lifetime buy.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.
