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Nvidia's auto biz surged last quarter. CEO Jensen Huang says it's a multitrillion-dollar opportunity.
Flying under the radar of Nvidia's (NVDA) AI demand-fueled earnings report was one of the chipmaker's smaller, but growing, businesses: automobiles.
Nvidia said first quarter automotive revenue climbed to $567 million, up 72% from a year ago. In the fourth quarter, its auto revenue nearly doubled from a year ago, consisting mainly of hardware and software systems used in autonomous driving.
'Year-on-year growth was driven by the ramp of self-driving across a number of customers, and robust end demand for NEVs [new energy vehicles],' Nvidia CFO Collette Kress said on the Q1 earnings call. 'And we are now in production with our full-stack solution for Mercedes Benz, starting with the new CLA [sedan], hitting roads in the next few months.'
Nvidia's 'full-stack' solutions, like the one it provides to Mercedes, are ones where Nvidia combines hardware like its DRIVE AGX Orin chips with its DriveOS software to power advanced driver assistance features in next-generation vehicles.
The company is also using its technologies to advance manufacturing by streamlining assembly lines and using AI in factory robots. Companies like GM and Hyundai will use those technologies for "smart factory" initiatives, Kress said in March of this year.
It's all supposed to add big dividends to Nvidia's top-line numbers. While data centers and gaming hog the headlines, automotive could soon start catching up.
'Nvidia's automotive vertical revenue is expected to grow to approximately $5 billion this fiscal year,' Kress said during the Q4 call in late February.
Nvidia said earlier this year that Toyota — the world's largest automaker by volume — would be using Nvidia's self-driving tech as well.
Nvidia chips are already used to power self-driving technologies at Mercedes (MBGAF), Volvo ( China's BYD (BYDDY), and device maker Foxconn (FXCOF), for example. Nvidia chips are also used in some of Tesla's (TSLA) supercomputers.
The confluence of supercomputing and robotics is one of the next big frontiers for AI. CEO Jensen Huang calls it physical AI, or embodied AI, where physical objects like cars or robots harness AI to interact with the real world, for instance, with self-driving cars or robots moving about a factory floor.
At CES this year, Huang said the AV 'revolution' and embodied AI would likely be the first multitrillion-dollar robotics opportunity. He said this week that Tesla was a partner.
'We do a lot of business with Tesla and xAI," Huang said in an interview with Bloomberg following this week's earnings release. 'We're going to build many more computers together. [CEO Elon Musk's] self-driving car, his Optimus robot, every single one of them is world-class and revolutionary.'
Musk and Tesla are poised to begin their robotaxi testing in Austin in June, as early as the 12th. Musk himself has said Tesla's robotaxi endeavors would be a trillion-dollar business. Nvidia's Huang is rooting for Tesla.
Why? More chips and software sales to power another of Nvidia's growing businesses.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on X and on Instagram.
