Jensen Huang, the visionary founder and CEO of Nvidia, is widely regarded as an unparalleled evangelist for his company, perhaps even surpassing Salesforce's Marc Benioff in his unwavering optimism regarding future growth and financial performance.
Remarkably, Huang consistently substantiates this ambitious outlook with tangible results, quarter after quarter.
Therefore, instead of approaching his recent declaration of uncovering a "brand new $200 billion TAM for Nvidia" with inherent skepticism, his consistent track record suggests a degree of earned trust.
Huang strategically positioned this substantial new market opportunity around Nvidia's recently introduced CPU product, Vera, unveiled in March. During Wednesday's earnings call — which followed another record-breaking quarter for Nvidia, reporting $81.6 billion in revenue and projecting $91 billion for the upcoming period — Huang presented Vera as a potentially transformative offering, already demonstrating promising early sales figures.
Despite Nvidia's exceptional performance, Wall Street consistently expresses apprehension about potential disruptors that could challenge the company's market dominance.
Recently, these concerns have increasingly focused on the CPU market. While Nvidia reigns supreme in GPUs, the CPU landscape has historically been the stronghold of companies like Intel and AMD. Although Nvidia has previously developed CPUs, it has never been their primary business.
For instance, just last month, Amazon Web Services proudly announced a significant contract with Meta for millions of Amazon's proprietary AI CPUs. Amazon CEO Andy Jassy has explicitly stated his conviction that AWS is capable of producing AI chips, encompassing both GPUs and CPUs, at a comparable, or even superior, level to Nvidia.
However, with the introduction of the Vera CPU, available both independently and bundled with its Rubin GPU, Huang believes he has unlocked "a major new growth driver" for Nvidia. He asserted during the call that Vera represents "the world's first CPU, purpose-built for agentic AI."
"Vera opens a brand new $200 billion TAM for Nvidia, a market we have never addressed before, and every major hyperscaler and system maker is partnering with us to deploy it. The world is rebuilding computing for agentic AI and robotic physical AI. Nvidia sits at the center of these transitions," Huang declared, underscoring his characteristic enthusiasm.
He elaborated that while the "thinking" component of an AI model relies on GPUs, AI agents primarily execute their assigned tasks on CPUs. Huang further predicted that these agents would eventually operate on their own form of CPU-driven "PCs."
Vera's suitability for agents stems from its specific design to process tokens with maximum speed. This contrasts with traditional cloud architecture CPUs, which are optimized with "cores" to run multiple instances of applications as quickly as possible.
While this rationale appears sound, a pertinent question arises: with major cloud providers and numerous startups actively developing AI chips, what assures Nvidia's position as the leading supplier for agentic CPUs?
Huang's response is compelling: Nvidia has already secured $20 billion in sales of standalone Vera CPUs this year, emphasizing that this is merely the beginning of the market's evolution.
"The world has a billion users, human users. My sense is that the world is going to have billions of agents, not today. I mean, we're going to grow into it, but we'll have billions of agents, and those billions of agents will all use tools. And those tools are going to be like PCs, just like us humans using PCs today," he articulated, painting a vivid picture of future AI proliferation.
"We're going to need a lot more CPUs," he concluded, highlighting the immense demand he foresees.
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