Key Points
-
Nvidia is building a product and service ecosystem.
-
The strategy mirrors Apple’s business model, but for enterprises rather than consumers.
-
Stable free-cash-flow generation opens the door for more buybacks and a growing dividend.
I know what you’re probably thinking. Nvidia (NASDAQ: NVDA) is the most valuable company in the world — even bigger than Apple (NASDAQ: AAPL). Why would it need to “become the next Apple”?
Nvidia just had its annual GTC conference. And at that conference, management talked extensively about the boom in artificial intelligence (AI) inferencing and Nvidia’s growing ecosystem that expands beyond graphics processing units (GPUs) to capture more than one-time hardware sales.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
Just as Apple built an ecosystem of consumer products that have become as essential to many households as laundry detergent and toothpaste, so too is Nvidia building an ecosystem primarily for enterprises to create a recurring revenue stream in the age of AI inferencing.
Here’s why this evolving business model could be a game changer for investors by adding balance to Nvidia’s investment thesis.
Nvidia headquarters with a grey Nvidia sign out front.
Image source: Nvidia.
An ecosystem in the making
Nvidia’s earnings growth has exploded in recent years as key hyperscaler customers build data centers that rely on Nvidia GPUs. The data center business is so massive that other segments like professional visualization, gaming, automotive, and robotics barely move the needle. In fiscal 2026, the data center segment made up just under 90% of total revenue. And that puts pressure on Nvidia to continue selling GPUs to hyperscalers to maintain its breakneck growth rate.
Nvidia’s latest architecture, Rubin, already addresses part of the problem. It includes six chips that work together to improve efficiency at rack scale for data center applications. Many of Rubin’s breakthroughs are related to AI inference rather than training.
Think of the AI model as the knowledge base that AI agents and tools use to do real-world work. Applying AI models requires immense compute for inference.
The tokenization of inferencing creates a recurring revenue stream for Nvidia. The idea is that hyperscalers will charge customers based on the number of AI inference tokens used. As AI usage for generative AI, AI agents, and physical AI grows, so will the number of tokens demanded. Nvidia’s hardware and software are built to process tokens faster, which will appeal to hyperscalers.
All told, Nvidia’s goal is to create an ecosystem that includes its purpose-built AI chips, networking hardware, and inferencing software that will scale in lockstep with token demand — as inference and physical AI will demand far more tokens than simple chat-based generative AI.
Taking a page out of Apple’s playbook
Nvidia’s road map for capitalizing on inferencing recurring revenue mirrors Apple’s blueprint.
Advertisement
iPhone is the focal point of an ecosystem of Apple products that complement each other — from iPhone to Mac, iPad, Apple Watch, AirPods, etc. This is similar to Nvidia building on its GPU business with “extreme codesign” to capture revenue from AI data center compute, networking, and storage.
Apple has services that directly support those products, like iCloud, as well as services that can be integrated and used by those products — like Apple Music, Apple TV, Apple Card, etc. Nvidia’s recurring revenue stream from AI inference tokens would follow this same business model.
Apple has evolved into a stable, high-margin, moderate-growth company that generates a ton of free cash flow (FCF) to buy back stock and steadily increase its dividend. Similarly, Nvidia expects to spend 50% of its FCF this year on buybacks and dividends. Nvidia only pays a $0.01 quarterly dividend now, but I could see it announcing a massive dividend raise followed by moderate annual increases in a similar vein to what Apple has done for 14 consecutive years.
Nvidia is a great buy now
A potential slowdown in growth sounds like bad news for Nvidia. But in reality, it could just mark the next stage of the company’s maturation.
If Nvidia were able to reduce its dependence on data center hardware through an inferencing-as-a-service revenue stream, it could make the stock more appealing to balanced investors who like a little passive income sprinkled on their long-term holdings. After all, Apple commands a much higher valuation than Nvidia — with Apple trading at 29.3 times forward earnings compared to just 21.9 for Nvidia — suggesting that some investors value predictable earnings growth and balance more than the prospect of hypergrowth.
All told, Nvidia’s build-out of a recurring revenue stream is a brilliant way to help reduce the pain of an eventual pullback in hyperscale capital expenditures — making the stock’s investment thesis even more appealing to long-term investors.
Should you buy stock in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $495,179!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,058,743!*
Now, it’s worth noting Stock Advisor’s total average return is 898% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of March 24, 2026.
Daniel Foelber has positions in Nvidia. The Motley Fool has positions in and recommends Apple and Nvidia and is short shares of Apple. The Motley Fool has a disclosure policy.