Jensen Huang Just Signed AI Factory Deals Across Japan's Biggest Manufacturers. What That Means for Nvidia's Growth.

Artificial intelligence (AI) is moving beyond just cloud computing for software. It is moving into the real world and onto the factory floor. One example of this is Nvidia's (NASDAQ: NVDA) recent partnership in Japan.

The country is a leader in advanced manufacturing techniques and wants to maintain its lead in the age of AI and robotics. Japan is creating a 44-company consortium of industrial giants, called Noetra, to bring AI onto the factory floor, powered by Nvidia. This Rare Signal Is Flashing Again.

In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Here's the skinny on Nvidia's deal with Japan, and what it could mean for the stock going forward.

The collection of companies operating under the Noetra umbrella is part of the Japanese government's drive to remain relevant in the age of AI. Specifically, it aims to dominate advanced manufacturing techniques while remaining relatively independent of Chinese- and United States-based AI models. To spark this growth, the Japanese government is providing $6.1 billion in subsidies for AI across manufacturing and industrial use cases.

Nvidia was chosen as the compute backbone for the investment and is providing its advanced GPU clusters to power these innovations. It is unclear exactly how much the Japanese government and Noetra group will spend on Nvidia chips, but it could be in the tens of billions over many years. Sovereign AI investments are a growing theme in places like Japan, South Korea, and the Middle East, as a way to diversify away from the leading private companies from the U.S. and China.

Nvidia has positioned itself to benefit from both use cases. Japan and its industrial giants are poised to invest billions in AI infrastructure in the years ahead, with Nvidia powering it. While this will not be a negative for the company, it is actually small compared to the overall revenue.