NVIDIA Corporation NVDA is expanding its data center strategy through its “AI factory” (artificial intelligence factory) vision, and this move could further accelerate growth in its largest business segment. The company’s data center revenues already reached about $62 billion in the fourth quarter of fiscal 2026, rising 75% year over year. In full-fiscal 2026, the segment’s revenues grew 68% year over year to nearly $194 billion, showing how central it has become.
An AI factory is a specialized infrastructure designed to turn raw data into usable intelligence at scale. It manages the full AI lifecycle, from data ingestion to training and inference. Unlike traditional data centers, these systems are built specifically for AI workloads, using tightly integrated graphics processing units (GPUs), networking and software to maximize output.
This shift is important because global AI infrastructure spending is rising rapidly. In 2026 alone, top tech companies, including Amazon, Alphabet, Meta, Microsoft and Oracle, are projected to spend $660-$690 billion on AI data center expansions, according to a report by independent research firm The Futurum Group. NVIDIA is positioning itself at the center of this wave by offering full-stack solutions, including chips, interconnects and software platforms.
The AI factory model also increases NVIDIA’s revenue opportunity per customer. Instead of selling individual GPUs, the company can deliver complete systems and recurring software value. Partnerships with enterprises and cloud providers further expand this ecosystem. NVIDIA’s early lead and integrated approach give it a strong advantage. If AI adoption continues to scale across industries, the AI factory vision could become a long-term growth engine for the company.
Analysts’ projections also suggest that the company will continue to register strong revenue growth in its data center business. The Zacks Consensus Estimate for fiscal 2027 data center revenues is currently pegged at approximately $325.62 billion, indicating a year-over-year increase of 68%.
NVIDIA’s Competitors in AI Data Center Space
Advanced Micro Devices, Inc. AMD and Intel Corporation INTC are two major companies that are competing closely with NVIDIA in the AI data center space.
Advanced Micro Devices is gaining traction with its MI300 series accelerators, which are designed to handle training and inference for large AI models. AMD’s chips have attracted interest from major cloud providers seeking diversification beyond NVIDIA’s ecosystem. While Advanced Micro Devices’ software stack is still developing, its performance and pricing advantages make it a credible alternative.
Intel is also reasserting its presence with the Gaudi series of AI accelerators. The company is positioning Gaudi3 as a cost-effective and scalable option for AI data centers, targeting enterprise clients looking for flexibility. Intel’s broad reach in CPUs and server infrastructure helps it integrate AI solutions more easily into existing systems.
NVIDIA’s Price Performance, Valuation and Estimates
Shares of NVIDIA have surged around 68.5% over the past year compared with the Zacks Computer and Technology sector’s gain of 44.5%.
NVIDIA One-Year Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, NVDA trades at a forward price-to-earnings ratio of 22.17, below the sector’s average of 23.46.
NVIDIA Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NVIDIA’s fiscal 2027 and 2028 earnings implies a year-over-year increase of approximately 68.3% and 31.4%, respectively. Estimates for fiscal 2027 have been revised downward over the past 30 days, while estimates for fiscal 2028 have been revised upward during the same time frame.
Image Source: Zacks Investment Research
NVIDIA currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).