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NVIDIA (NVDA +1%) is a sliver of light on a relatively dim trading session today, inching higher while most of its peers encounter meaningful selling pressure. Two headlines crossed this morning that are likely contributing to today's relative strength. FT reported that the GPU designer wants to step into the robotics industry, leaning on its established dominance in AI. Meanwhile, The Information stated that ByteDance, the company behind the popular social media platform TikTok, is looking to allocate $7.0 bln to NVDA's chips next year.

ByteDance's appetite for the most advanced AI chips is not overly surprising. As a video social networking site, TikTok can benefit from AI-generated features like filters, editing, and purely AI-generated video. In fact, TikTok already boasts many AI-powered tools, from automatic music suggestions to effects and text-to-speech. Nevertheless, ByteDance spending $7.0 bln on NVDA's chips showcases the AI titan's steady leadership position in the AI space, a characteristic that does not look likely to change in 2025.

NVDA's desire to move more aggressively into robotics also does not come as a shock. However, it might be the company's next major growth lever.

• A comment that stood out during NVDA's Q3 (Oct) earnings call last month was that the industrial AI and robotics industries were accelerating, supported by breakthroughs in AI models understanding the physical world. Meta Platforms (META) demonstrated how AI has shaped its "metaverse" with its Ray-Ban smart glasses, which interact with the physical world, labelling items in real-time; this technology can be applied to robotics.
• Management added that some of the most prominent global industrial manufacturers are adopting NVIDIA Omniverse -- its real-time 3D graphics platform -- to automate workflows. For instance, Foxconn, which manufactures electronics, uses digital twins (virtual models of a physical object) built on NVIDIA Omniverse to increase efficiency at its Blackwell factories. Meanwhile, U.S.-based companies like Amazon (AMZN) have already been leveraging NVIDIA's robotics simulation technology at a few of its warehouses across the U.S.
• NVDA referred to the robotics aspect of AI as physical AI, where the technology understands and interacts with the physical world. The company added that physical AI can predict the immediate future, anticipating the next event in a series.

As its competition gains ground in the AI chip race, such as Advanced Micro (AMD), NVDA is potentially turning to robotics to fuel its next wave of growth. As a result, if Data Center growth begins to slow meaningfully in 2025, especially if tariffs and export restrictions bottleneck China-related revenue, NVDA might be able to make up the shortfall through industrial AI and its Omniverse offering. This will be an interesting area to watch over the coming months.