Nvidia’s astronomical rise to the world’s most valuable public company. It was powered by graphics processing units (GPUs). Now, as AI enters its agent phase, CEO Jensen Huang is betting future growth on central processing units (CPUs), which have long been a secondary focus for the company.
“The world has a billion human users. My sense is that the world will have billions of agents. We’re going to need a lot more CPUs,” Huang told analysts on Nvidia’s latest quarterly earnings call yesterday (May 20).
GPUs are great at the parallel processing required for AI workloads, while CPUs excel at processing tokens quickly – a basic requirement for agentic systems. Nvidia has already generated $20 billion in CPU revenue this year, according to CFO Colette Kress, who told analysts that these results “position us to become the world’s leading CPU supplier.”
The main part of this push is Vera, Nvidia’s latest CPU unveiled in March. Huang described it as a “major new driver of growth,” adding that the chips open up “a market we haven’t dealt with before.” The CPU market opportunity is estimated to be worth $200 billion.
For now, Nvidia’s bottom line is still driven by GPUs. For the February-April quarter, the company reported revenue of $81.6 billion, up 85 percent year over year, and a 211 percent jump in net income to $58.3 billion, beating Wall Street expectations. Data center revenues, which include artificial intelligence chips, reached $75 billion, an increase of 92% over the previous year.
Huang made his career by anticipating shifts in the industry. When he founded Nvidia in 1993, it was a gaming-focused company. It later turned towards artificial intelligence as graphics processing units proved well-suited to the technology, putting Nvidia at the heart of the current boom. More recently, the company has expanded into emerging areas such as “physical AI,” including self-driving vehicles and robotics.
However, the CPU market presents a different challenge. Competitors are already starting to pick up steam as demand for these chips rises along with AI workloads. Intel shares have risen 193 percent since January, while AMD shares have risen 97 percent over the same period.
Both companies are leaning toward this shift. Intel CEO Lip Bo Tan described CPUs as “the indispensable foundation of the AI era,” adding that the trend “is not just our wishful thinking, it’s what we’re hearing from customers.” The company reported quarterly revenue of $13.6 billion last month, up 7 percent year over year. AMD is seeing similar momentum, with revenue rising 38 percent to $10.3 billion; CEO Lisa Su told analysts she expects CPU revenue to grow 70 percent this quarter.
However, analysts see opportunity for Nvidia. Its Vera chips “add a dimension of growth in the CPU market,” Raymond James analyst Simon Leopold said. “Although we are not sure that the ratio of CPUs to accelerators will rise to 1:1, we accept that CPU growth is faster and the ratio is narrowing, which is in Nvidia’s favor.”
