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What happened

2021 was a big, and transitional, year for specialty semiconductor chip company Nvidia (NASDAQ:NVDA). The company mostly known for gaming and graphics cards evolved over the course of the year, and investors took notice. For the full year 2021, Nvidia stock returned a resounding 125.3%, according to data provided by S&P Global Market Intelligence.

So what

Much of the gains in shares of Nvidia came late in the year as the concept of the metaverse took hold. In September and October alone, Nvidia stock soared more than 50%. That period led up to when Facebook CEO Mark Zuckerberg officially announced the company was changing its name to Meta Platforms as he laid out his vision for the future of interactive virtual technology. Investors realized then that Nvidia would play a large role with its Omniverse Enterprise technologies for commercial application in the metaverse. 

Image source: Getty Images.

Now what

Nvidia CEO Jensen Huang presented investors with his vision of the company’s role as it pushes into artificial intelligence (AI), virtual reality, and autonomous vehicle (AV) applications. The company says it will use its technologies “to deliver a powerful, cloud-based computing platform capable of generating a wide range of real-world scenarios for AV development and validation.”

Nvidia’s omniverse virtual collaboration and simulation platform will power its self-driving vehicle technology. The company will use lidar sensor maker Luminar Technologies‘ sensors for its AV platform and has announced that the vehicle computing platform with Luminar’s sensors will begin production in 2024. 

But self-driving vehicles are only one application for Nvidia’s omniverse platform. The company expects customers to utilize it for gaming development, media and entertainment, and manufacturing, among other uses.  

Nvidia reported record revenue of $7.1 billion in its fiscal 2022 third quarter ended Oct. 31, 2021. That represented a jump of 50% over the prior-year period. Gaming still comprised 45% of that revenue. But data center revenue increased 55% and its Omniverse Enterprise visualization segment revenue soared 144% year over year.

The automotive segment still doesn’t amount to a significant contribution to revenue, but investors believe it will be a future catalyst. As automotive, virtual reality, and other manufacturing uses grow, Nvidia could continue to be a winning metaverse stock. After the significant gains realized in 2021, that helps explain why Nvidia stock has been a favorite of investors and analysts alike. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.