Nvidia’s near term message to investors from CES is simple; demand is running ahead of expectations. This is based on three comments from the company over a one day period.

First, during his 90 minute keynote, Jensen’s message on near term demand pointed to upside. Twice he used the word “skyrocketing” to describe demand for GPUs. Specifically, he noted that “the amount of computation necessary for AI is skyrocketing” and “the demand for Nvidia GPUs is skyrocketing.”

Underlying his bullish demand comments was the view that the size and number of more robust models is increasing by “an order of magnitude every single year.”

Jensen also weighed in on the scaling law debate and said that “the computing law continues to scale,” which implies that future AI progress will be dependent on ever larger compute requirements.

Second, following the keynote, CFO Colette Kress added to the favorable outlook, noting that the company’s previous outlook calling for $500B in Blackwell and Rubin revenue through the end of 2026 has “definitely gotten larger.” She also referred to demand as “tremendous” and expressed confidence in the company’s ability to fulfill that demand.

Third, Jensen commented that demand for the relaunch of the H20 chips into the China market is “high,” “quite high,” and “very high,” even though formal regulatory approvals for shipments have not yet been completed. He noted that Nvidia should have capacity to fill that demand once it is turned on, saying they have “fired up our supply chain and H200s are flowing through the line.”

My take: As a point of reference, in CY25 Nvidia likely grew revenue by 65% and is expected to grow 50% in CY26. My interpretation of the comments this week is that we should expect a similar or slightly higher revenue growth this year, despite the law of large numbers. In other words, I believe growth will end the year at 65% plus vs. the Street at 50%.

Jensen’s keynote kicked off with a video titled “Physical AI.” Need I say more about what the central long term message was to investors.

Looking at the presentation through the eyes of an investor, the company appeared to be addressing the central question from Wall Street, which is how can the Nvidia growth party continue beyond 2026.

Physical AI systems are different than the chatbots and agentic AI that have been the focus over the past three years and the catalyst for massive investment from the hyperscalers, which I believe accounts for about 60% of revenue.

Physical AI can understand, reason, and interact with the real world. That means these models will excel at computer vision and applied physics, skills chatbots do not prioritize.

Some of the biggest use cases of this AI include a range of light physical AI on your phone or glasses processing the world around us, up to autonomous driving systems, specialized robots, and humanoid robots.

My take: Physical AI is going to be a meaningful growth driver for Nvidia starting in CY28. Today, only about 1% of Nvidia’s sales, reported as the Automotive and Robotics segment, are used to deliver physical AI. I believe by CY30 that Automotive and Robotics segment will grow to be a $50B plus annual business, up from about $3B a year today. That means that in CY30, physical AI could account for 8% of $600B, up from our estimate of $350B in CY26, with the Street at $320B.

Shares were flat after hours following the keynote, and since then the stock is down 4% on the week versus a flat Nasdaq. The fact that the stock is not up on this is the latest evidence that investors are reluctant to buy into the idea that Nvidia can continue to grow in CY27 and beyond.

My take: Over the past two months, investors have been reluctant to give the company credit for good news. I believe a combination of good news from Nvidia earnings, along with a better understanding that we are still early in AI, will expand the stock’s multiple.

In other words, I believe investors will be rewarded for what I expect will be results above expectations.

Now all eyes shift to what the hyperscalers will say during their December earnings calls later this month about their capex outlook for CY26. This is key because I estimate about 60% of Nvidia’s revenue comes from these six companies, Amazon, Google, Meta, Microsoft, Oracle, and xAI. Their commentary on changes to capex this year will be a read on how Nvidia growth will play out over the next 12 months.

As a point of reference, today the Street’s outlook for hyperscaler capex spending in CY26 remains unchanged from last month, up 30% y/y. I believe for Nvidia to hit the Street’s 50% growth outlook for this year, we need to see that 30% expectation increase to around 35%. I expect the message from hypercalers later this month to point to 40% capex growth.

Disclaimer