Here are 143 billion reasons to buy Nvidia stock

There is no denying that artificial intelligence (AI) has been the driving force Nvidia‘S (NASDAQ: NVDA) astonishing stock market rally since late 2022 as rapidly increasing adoption of this technology has led to exceptional growth in the company’s revenue and profits.

For example, Nvidia’s data center revenue jumped a whopping 154% in the second quarter of fiscal 2025 to a record $26.3 billion. The surge in revenue from this segment was the reason Nvidia’s total revenue jumped 122% year over year to $30 billion, crushing Wall Street expectations. What’s more, the company’s outlook was stronger than analysts had expected, but the stock’s move suggests the market is not happy with its numbers and prospects.

AI fatigue could hit Nvidia

Investors don’t seem to be too excited about Nvidia’s latest quarterly results, as the company’s shares have been falling since its earnings call on August 28. This could be because Nvidia expects its top line to grow “only” 80% year over year in the current quarter to $32.5 billion.

Sure, the chipmaker’s outlook indicates a slowdown from the prior quarter’s reading, but that was inevitable given the massive scale of Nvidia’s business and the revenue it already generates. Again, the relatively modest outlook compared to the prior quarter may have prompted investor concerns that Nvidia’s blistering growth could finally slow down.

The silver lining is that the AI ​​chip market seems poised for impressive growth over the long term, which could allow Nvidia to maintain healthy levels of growth thanks to its dominant position in the market. However, concerns about AI’s ability to provide sufficient returns for companies pouring billions of dollars into the technology seem to be weighing on investors.

So it’s fair to say that investors and analysts may want more than AI to bolster their confidence in the company’s long-term growth prospects. That’s where an emerging $143 billion market could come in handy for Nvidia — a market that’s not big enough to move the needle for the company right now, but has the potential to become a key growth driver over the long term.

This huge market could be another catalyst for the company’s development.

According to market research report aggregator Market.us, the cloud gaming market was worth an estimated $5 billion last year. However, this market is expected to achieve an impressive compound annual growth rate of almost 47% through 2032, generating $143 billion in revenue by the end of the forecast period.

The good news for Nvidia investors is that it’s not unaware of this lucrative opportunity. The company already operates a cloud gaming service known as GeForce Now. While Nvidia doesn’t disclose many details about the service and includes its revenue in the 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 overall membership base likely indicates a number of paid users.

The number of GeForce Now subscribers is greater than the number of PlayStation and Xbox cloud gaming users combined, according to Market.us. More specifically, SonyPlayStation’s cloud gaming service had 3.6 million subscribers last year, while MicrosoftXbox cloud gaming base hit 4.2 million.

In comparison, the research report says that the total number of paid cloud gaming subscribers was almost 30 million last year. Nvidia has therefore captured 30% of the cloud gaming user base. More importantly, there is a strong possibility that it can convert more of its free members into paid subscribers with its rapidly growing library.

Nvidia executives said on its latest earnings conference call that it offers a library of over 2,000 titles on GeForce Now, which the company says is “the largest content offering of any cloud gaming service.” However, even if Nvidia manages to maintain a 30% share of the cloud gaming market over the next decade, it could reap over $40 billion in revenue from the market, based on market estimates of $143 billion.

However, according to Statista, the average spend per cloud gaming user is set to grow impressively in the coming years, jumping from $14 last year to almost $38 in 2027. So Nvidia could enjoy a larger share of the cloud gaming market revenue in the long run, which could outpace its user share. More importantly, Nvidia has already built a nice cloud gaming user base that it could eventually monetize.

All of this suggests that cloud gaming could become a significant business for Nvidia in the long term, and it wouldn’t be surprising if the company generates significantly more than the estimated $40 billion. Cloud gaming could give Nvidia a big boost in the long run, considering the company has generated just over $11.2 billion in revenue from the segment over the past four quarters.

Add to that the secular growth opportunity in the personal computing and digital twin markets, and investors have plenty of reasons to remain bullish on Nvidia beyond AI in the long term. Buying and holding shares of this technology could prove to be a smart move for the long term.

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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 call options on Microsoft and short January 2026 $405 call options on Microsoft. The Motley Fool has a disclosure policy.

Forget Artificial Intelligence (AI): Here are 143 billion reasons to buy Nvidia stock Hand Over Fist was originally published by The Motley Fool