Where Will Nvidia Stock Be in 10 Years? | The Motley Fool

The most resilient businesses constantly reinvent themselves, and Nvidia ( NVDA +3.00%) is an excellent example of this phenomenon. Its ability to quickly dominate new technology opportunities is a big reason why it has soared to become the largest company in the world with a market cap of $4.4 trillion. And even though generative artificial intelligence (AI) is behind most of the recent expansion, the boom might not last forever. Let's explore what might come next for this legendary chipmaker. Nvidia has a track record of reinventing itself Since its founding in 1993, Nvidia has reliably banked on new use cases for the graphics processing unit (GPU) -- a technology that it named and pioneered for its proficiency in parallel processing, which involves breaking down large tasks into smaller parts and working on them simultaneously. Parallel processing turned out to be extremely useful for rendering video game graphics. And in the late 1990s and early 2000s, Nvidia became a major player in the industry, supplying consumer GPU chips for PCs and even Microsoft 's early Xbox gaming consoles. NASDAQ: NVDA Key Data Points Nvidia boomed again in the 2010s when people realized that its GPUs were also extremely good at cryptocurrency mining . Cryptocurrency miners relied on the same PC-focused GPUs as gaming, and both growth drivers were included in the company's gaming segment, which was historically the bulk of revenue. However, things have changed. With the growth of generative AI, Nvidia's once-vital gaming segment has become an afterthought, representing a measly 7.5% of the company's $57 billion in third-quarter revenue. The company is now massively dependent on its data center segment, where it sells large enterprise-focused GPU systems to help clients run and train AI large language models (LLMs). This business represented around 90% of Q3 revenue, which suggests Nvidia lacks diversification and is extremely overexposed to a potential slowdown in this particular market. The generative AI boom might not last forever While AI-related demand continues to soar year over year, some cracks are forming in the foundation of this opportunity. For starters, many of Nvidia's customers are burning through mountains of cash -- the best example is OpenAI. The ChatGPT creator is estimated to have lost $11.5 billion in its most recent quarter alone. And analysts at Deutsche Bank think the situation could worsen with combined losses totaling $140 billion between 2024 and 2029. It's reasonable to assume that other LLM companies like Anthropic could be experiencing similar cash burn. As a hardware provider, Nvidia operates on the picks and shovels side of the AI equation, shielding it from the challenges faced by some of its clients. That said, over the long term, this will eventually become Nvidia's problem, too. If the LLM clients continue burning money, they could run out of the funds needed to continue buying Nvidia hardware. Image source: Getty Images. Compared to pure plays like OpenAI, Nvidia's hyperscaler clients like Amazon , Google , and Microsoft are in a better position to absorb AI...

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