Nvidia is making substantial investments in artificial intelligence that controls real-world objects, referred to as "physical AI" or "large action models." This technology aims to enable robots, factory lines, and autonomous machines to perform physical tasks, in contrast to current large language models which primarily handle text and code. Engineers and investors are increasingly focusing on these "world models," which are trained on simulations and video games, to advance robotics.
Nvidia CEO Jensen Huang is actively securing partnerships to establish Nvidia's hardware and software as the default choice for this emerging field. For instance, in Japan, Nvidia has formed a "Cosmos Coalition" with seven major industrial giants including Fujitsu, FANUC, and Yaskawa Electric. These companies plan to standardize on Nvidia's Cosmos, Isaac, Metropolis, and Jetson platforms for next-generation industrial automation. This initiative is part of a larger national project where Nvidia is collaborating with Japan's Noetra consortium to build a national physical AI infrastructure, including a Vera Rubin AI factory featuring 13,750 Vera CPUs and 27,500 Rubin GPUs.
Japan's government plans to mobilize over $2.3 trillion in public and private investment by 2040 across physical AI, semiconductors, and data centers, with Noetra's roadmap including roughly $6.3 billion in sovereign AI spending over five years. This represents a long-term, trillion-dollar demand stream for Nvidia's technologies. Additionally, Amazon Web Services (AWS) and Nvidia announced a major expansion of their collaboration, with AWS set to deploy 2 million additional Nvidia GPUs by 2027-2028, and Amazon Robotics adopting Nvidia's full physical AI stack for warehouse automation.
While the specific article mentions China as a major customer, recent news indicates Nvidia's broader strategy. Nvidia is also investing $6 billion through a licensing deal with AI startup Poolside to build an open-weight AI model to compete with Chinese heavyweights like DeepSeek and Kimi K3, and with U.S. frontier AI companies like OpenAI and Anthropic. This move reflects Nvidia's efforts to succeed across multiple AI battlegrounds. Nvidia reported $96.2 billion in sales for the second quarter, with data center revenue at $89 billion, up 117% year-over-year, and expects third-quarter revenue to reach $108 billion, partly from its new Rubin GPUs. The company has committed $279 billion to secure supply and manufacturing capacity for future data center projects.
This aggressive strategy to embed Nvidia's technology into critical national infrastructures and large enterprises ensures a sustained demand for its products. The long-term commitments from governments and industrial giants, such as sovereign AI factories and standardized control platforms, provide Nvidia shareholders with significant visibility into future revenue and profit margins, making its chips and tools a foundational element in the global shift towards physical AI.
