NVIDIA Corp. (NASDAQ:NVDA) has announced significant revenue projections for its sovereign artificial intelligence segment in 2025, driven by global demand for nation-specific AI infrastructure.
What Happened: During the second-quarter earnings call, Colette Kress, Nvidia's Chief Financial Officer, stated, "We believe sovereign AI revenue will reach low double-digit billions this year." This highlights the company's optimism about the expanding market for country-specific AI solutions.
Jensen Huang, Nvidia's CEO, emphasized the importance of sovereign AI, noting that countries are recognizing their data as a national resource. He said, "They have to use AI, build their own AI infrastructure so that they could have their own digital intelligence."
The demand for sovereign AI has surged with the rise of generative AI technologies. Kress added, "It certainly is a unique and growing opportunity, something that surfaced with generative AI and the desires of countries around the world to have their own generative AI."
Why It Matters: Nvidia's announcement comes on the heels of the second-quarter earnings report, where the company's revenue exceeded expectations. Nvidia's data center revenue played a crucial role in boosting its topline, despite a slight contraction in gross margin.
Additionally, Nvidia's revenue in China has shown resilience despite U.S. export controls. This indicates that the company is capable of navigating complex geopolitical landscapes, a skill that will be crucial as it seeks to tap into the sovereign AI market.
CEO Huang has also identified a $1 trillion opportunity as data centers transition to accelerated computing and generative AI. This shift is expected to drive demand for Nvidia's products and services, further solidifying its position in the AI market.
Price Action: In after-hours trading, Nvidia fell 6.89% to $116.95. During the regular trading session, the stock was down 2.10%. Year to date, NVDA has seen a remarkable gain of 160.76%, according to data from Benzinga Pro.