Nvidia's stock is set to soar as the space economy takes off, and for good reason. While many investors are flocking to pure-play space stocks, I argue that Nvidia is the smarter choice. The company's dominance in artificial intelligence (AI) chips and infrastructure on Earth positions it to become a leader in space applications, both from in-space and Earth-based operations. This is particularly exciting given the booming space economy, projected to reach $1.8 trillion by 2035, with a compound annual growth rate (CAGR) of about 9%.
One of the key drivers of Nvidia's potential success in space is its focus on AI. CEO Jensen Huang has emphasized the "very good, very interesting applications" of AI in space, particularly in the development of space-based data centers. While the economics of space-based AI data centers are currently poor, Huang believes they will improve over time, thanks to the abundance of solar power in space. This is a significant advantage over Earth-based data centers, which face power consumption challenges.
Nvidia's first-mover advantage in AI space application development is another key factor in its potential success. The company's DRIVE platform, launched in 2015, has become the go-to solution for almost every company developing autonomous vehicles or autonomous vehicle technology. Similarly, Nvidia's recent launch of space AI computing platforms, including the space-hardened Space-1 Vera Rubin Module, positions the company to lead the way in space applications. The Rubin GPU on the module delivers up to 25x more AI compute for space-based inferencing, enabling next-generation compute for orbital data centers, advanced geospatial intelligence processing, and autonomous space operations.
Several space companies are already using Nvidia's AI tech for space applications, including Aetherflux, Axiom Space, Kepler Communications, Planet Labs, Sophia Space, and Starcloud. Planet Labs, the only publicly traded company in this group, is particularly interesting. Its satellites take detailed images of the entire Earth daily, and it primarily sells its data to commercial and governmental agencies via subscriptions. While the company is not yet profitable, it recently began generating positive operating cash flows, which is a rare achievement among pure-play space companies.
Nvidia's job ads also provide insight into the company's focus and strategy. For example, the posting for an "Orbital Datacenter System Architect" highlights the company's commitment to developing products for AI in orbit. This is an opportunity to join the leader in AI systems at the inception of a completely new industry.
In conclusion, Nvidia's stock is poised to benefit significantly from the booming space economy. The company's dominance in AI chips and infrastructure, combined with its first-mover advantage in space application development, positions it to become a leader in space applications. While many investors are flocking to pure-play space stocks, I believe Nvidia is the smarter choice, offering a more diverse and lower-risk investment opportunity. Personally, I think Nvidia's stock is set to rocket as the space economy takes off, and I'm excited to see how the company continues to innovate and lead the way in this exciting new industry.
