Prediction: This $80 Billion Market Could Be the Next Big Growth Driver for Nvidia Stock

Graphics processing units (GPUs) have been Nvidia's (NASDAQ: NVDA) bread-and-butter business for a long, long time. The company initially made its name producing GPUs meant for deployment in personal computers (PCs) for gaming and content creation, before eventually striking gold with its data center GPUs that are now in red-hot demand thanks to artificial intelligence (AI).

As it turns out, data center compute chips now produce the majority of Nvidia's revenue. The company sold $22.6 billion worth of data center GPUs in the second quarter of fiscal 2025 (which ended on July 28). The segment's revenue shot up 162% year over year, accounting for 75% of the company's top line. However, there is another niche within the data center business where Nvidia is now gaining impressive traction.

This particular business segment is now bigger than Nvidia's gaming business, and it could turn out to be a key growth driver for the company in the long run. Here's a closer look at this emerging business that could supercharge Nvidia's growth.

Nvidia is making terrific progress in this $80 billion market

Nvidia sells two types of data center chips. The first are the GPUs, which are already generating several billion dollars in revenue for the company each quarter. The second type of Nvidia's data center chips is its networking chips, which are also selling like hotcakes as the company's latest quarterly results show.

Nvidia sold $3.7 billion worth of networking chips in the previous quarter, up 114% from the same quarter last year. The company's networking revenue in the first half of the fiscal year stood at $6.8 billion, translating into an annual revenue run rate of nearly $14 billion. The global data center networking market is estimated to generate $37.6 billion in revenue this year. If Nvidia indeed ends fiscal 2025 with $14 billion in data center networking revenue, it would end up controlling 37% of this market.

What's worth noting here is that Nvidia is reportedly growing at a faster pace than the data center networking space, which has received a major shot in the arm thanks to the advent of AI. According to market research firm Dell'Oro Group, the size of the data center switching market is likely to expand by 50% thanks to the growing need for switches deployed in back-end AI server networks.

The researcher sees spending on switches used in back-end AI servers hitting $80 billion over the next five years, which would be nearly double the size of the current data center switch market. We have already seen that Nvidia is enjoying a solid share of this market, and Dell'Oro points out the same. The research firm says that the InfiniBand networking platform is currently dominating the market for AI back-end networks, and it is worth noting that Nvidia offers networking products based on this networking communications standard.