Nvidia‘s (NASDAQ: NVDA) revenue has been soaring quarter after quarter thanks to its expertise in powering artificial intelligence (AI) projects. The company’s graphics processing units (GPUs) are the fastest around, driving one of the key elements of AI: the deep learning of AI models, which serves as a starting point for their incredible performance down the road.

All of this has helped Nvidia’s data center revenue reach record levels, climbing more than 400% to $18.4 billion in the most recent quarter. But this data center business doesn’t stop at just a suite of leading AI chips. The company offers customers a full array of products and services through the data center unit to help them advance their AI platforms. And one of these offerings is software and services, a business that just reached a $1 billion annualized revenue run rate in the quarter.

In fact, CEO Jensen Huang said during the earnings call that software should become “a very significant business over time.” All of this suggests software might be Nvidia’s new AI growth driver, further expanding the company’s opportunities to dominate in this hot technology. Could this high-flying stock continue to soar? Let’s find out.

Nvidia’s software opportunity

So what is this software opportunity all about? Well, let’s consider what companies could do with AI on their own and then see what Nvidia offers. To build an AI software platform, a company could gather various open-source software elements to include in its existing infrastructure.

But relying on a vast number of open-source packages makes it hard to maintain security and stability — and those aren’t minor issues. Failure in these two areas could lead to failure of an entire AI project. And many companies don’t have the engineering resources necessary to keep their software stack running both on site and through every cloud service provider worldwide.

This is where Nvidia comes in with its Nvidia AI Enterprise, a sort of operating system for AI. Through enterprise, Nvidia manages a customer’s software stack, doing everything from optimizing to updating and more.

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And the pre-trained models and tools available through the software system help customers gain when it comes to efficiency, therefore reducing costs over time. For instance, the Nvidia Rapids accelerator, which uses GPUs, when paired with the Apache Spark data processing system makes the job five times faster and cuts operational costs by five — this is compared to systems relying on central processing units (CPUs).

“My guess is that every enterprise in the world, every software enterprise company that are deploying software in all the clouds and private clouds and on-prem will run on Nvidia AI Enterprise,” Huang said during the earnings report.

GPUs are the key

All this suggests software could indeed be the next growth driver for Nvidia. Yes, the company’s top GPUs are the key product behind all of its other offerings. But by expanding into robust and varied products and services harnessing the power of these high-performing chips, Nvidia is extending its growth opportunity. And software, due to its essential role in AI, could offer Nvidia its next big AI growth driver.

Does this mean Nvidia may continue to soar even after climbing more than 270% over the past year? It definitely suggests Nvidia has what it takes to continue to advance over the long term — even if it marks a pause here and there.

That’s because Nvidia’s software ambitions confirm the company isn’t just about the GPU. Yes, the tech giant must stay ahead of rivals when it comes to chip performance — and its increases in research and development (R&D) spending indicate that’s a priority. Last year, Nvidia’s R&D spending rose 18% compared to the previous year.

Nvidia’s software strategy, and the fact that its software platform is available through all the leading cloud providers, show us yet another area that could drive spectacular growth moving forward. And that should drive further share price gains over time.

All of this means Nvidia today, trading at 32x forward earnings estimates, looks pretty cheap for a company with so much long-term potential. And that makes this growth stock that’s already soared still an excellent buy today.

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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

This May Be Nvidia’s New Artificial Intelligence (AI) Growth Driver. Could the Stock Continue to Soar? was originally published by The Motley Fool