Before the CES (Consumer Electronics Show), some Wall Street Analysts raised their expectations for NVIDIA (NVDA.O), believing that CEO Jensen Huang would reveal new details about the next generation AI Datacenter processor during his keynote speech on Monday night. This speculation triggered a rise in NVIDIA's stock price. However, after no new details were disclosed on Monday night, NVIDIA's stock price fell by 6% on Tuesday.

At the exhibition, Jensen Huang indeed announced the new RTX 50 series gaming graphics cards based on the Blackwell chip architecture. These graphics cards performed impressively, especially with the latest version of DLSS (Deep Learning Super Sampling) technology—a form of AI image rendering technology that enhances the frame rate for players. Additionally, he announced the 'Digits Project', which is essentially a desktop computer equipped with NVIDIA-designed Arm architecture-based CPU and GPU, featuring the new GB10 Grace Blackwell superchip capable of delivering AI performance of up to 10 quadrillion floating-point operations per second.

Digits is NVIDIA's first desktop computer in history, set to launch in May with a starting price of $3,000. Jensen Huang stated, 'Putting AI supercomputers on the desktops of every data scientist, AI researcher, and student empowers them to participate in and shape the future in the AI era.'

From a pricing perspective, this computer appears to be targeted at a niche market for high-end engineers, with likely limited sales. Meanwhile, NVIDIA has not fully embraced the 'desktop computer' label. A spokesperson told me, 'Digits is an AI device running a Linux system, designed to serve developers.'

Nevertheless, it is a small computing device that can be placed on a desk. Calling it a desktop computer is not inappropriate.

Ultimately, Digits is expected to become the most significant release at this year's CES. This computer utilizes a scaled-down version of NVIDIA's Grace AI server CPU technology, with a size similar to that of a Mac Mini. Thanks to MediaTek's low-power chip technology, Digits has achieved this compact design. MediaTek is a major competitor of Qualcomm (QCOM.O) in the mobile processor market for Smart Phones.

In the long run, NVIDIA's logical move may be to further shrink this CPU size, adapting it for Consumer-grade Windows laptops. Combining its expertise in graphics technology, MediaTek's low-power advantages, and the efficiency of Arm architecture CPUs, NVIDIA may be able to create a processor that excels in gaming graphics, efficient productivity, and long battery life. Although Windows PCs based on Arm (ARM.O) architecture have previously performed poorly in software compatibility, NVIDIA's outstanding software engineering capabilities may change this situation.

Jensen Huang also made a strong hint about this. During the Q&A session with Analysts at CES, he stated, "We collaborated with MediaTek to design a high-performance CPU, which is a win-win situation."

When an Analyst further questioned whether Digits was NVIDIA's initial attempt to enter the PC market, Jensen Huang replied, "I have to wait for the right moment to tell you. Clearly, we have plans."

This makes financial sense for NVIDIA. Despite limited growth in recent years, the desktop and laptop market remains significant for Intel (INTC.O) and AMD (AMD.O). According to FactSet data, Analysts expect Intel to generate $30 billion in revenue from its client computing business in 2024, while AMD's client segment revenue is projected at $6.7 billion. For NVIDIA, which is expected to achieve $129 billion in sales in the 12 months ending January 2025, this potential new revenue in the hundreds of billions of dollars is undoubtedly enticing.

Over the past two years, NVIDIA has conquered the AI datacenter market with well-designed, high-performance chips. NVIDIA wants to take control of everything. This could be good news for Consumers, but it poses a challenge to the existing PC market landscape.