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Yahoo
23-03-2025
- Automotive
- Yahoo
300 Billion Reasons to Buy Nvidia Before This Budding Business Becomes a Giant
Nvidia (NASDAQ: NVDA) has gotten into a habit of capitalizing on lucrative growth trends over the years, and it looks like the company is now on its way to making the most of another massive market that's currently in its early phases of growth. From gaming personal computers (PCs) to cryptocurrency mining to high-performance computing (HPC) and now artificial intelligence (AI), Nvidia has managed to hit gold in multiple end markets that have now helped it become the third-largest company in the world (as of this writing). It looks like the company is going to add the automotive business to that list. In this article, we will take a closer look at where Nvidia's automotive business is right now and check why it could become the next big growth driver for the company. Nvidia finished fiscal 2025 (which ended on Jan. 26) with automotive revenue of $1.7 billion, an increase of just 5% from the previous year. However, this business boomed significantly in the final quarter of the year, with revenue more than doubling from the year-ago quarter. Looking ahead, Nvidia is expecting its automotive revenue to grow to $5 billion in fiscal 2026. That would be a jump of nearly 3x from the previous fiscal year. The reason why Nvidia is confident of achieving such impressive growth in its automotive business this year is because of the fast-improving demand for the company's solutions by major automakers and component suppliers. Earlier this year, the company announced a partnership with Toyota, pointing out that the world's largest automaker will "build its next-generation vehicles on Nvidia Orin running the safety-certified Nvidia DriveOS." Meanwhile, self-driving technology company Aurora and German automotive component giant Continental will also be deploying the company's DRIVE Thor computer system for launching driverless trucks. Importantly, this isn't the only place where Nvidia is winning in the automotive segment. Hyundai has selected Nvidia's solutions for developing autonomous driving systems in simulated environments. Additionally, the Korean automotive giant is also going to use Nvidia's Omniverse digital twin platform for designing products and creating prototypes. Hyundai also plans to use Omniverse for optimizing its existing and upcoming manufacturing facilities to "improve production quality, streamline costs, and enhance overall manufacturing efficiencies." And now, automotive giant General Motors has announced a partnership with Nvidia to optimize its factory planning. GM will also use Nvidia's Drive platform to develop advanced driver assistance systems (ADAS) along with improving the safety of its vehicles. Nvidia's Blackwell-based Drive AGX system has also been selected by automotive components giant Magna International to integrate AI capabilities into vehicles. These partnerships demonstrate that automakers and component suppliers are increasingly turning to Nvidia to develop next-generation vehicle technologies and fine-tune their factory operations with digital twins. At its investor day held in 2022, Nvidia pointed out that it sees a massive addressable opportunity worth $300 billion in the automotive space. For perspective, that's higher than the $100 billion opportunity it saw in gaming at that time and equal to the $300 billion revenue opportunity it outlined for its graphics cards and chip systems. The new partnerships Nvidia has announced of late have put the company well on its way to realizing the lucrative automotive opportunity, which is why the company expects its revenue from this segment to triple this year. As such, it won't be surprising to see the automotive business becoming the next big pillar of Nvidia's growth in the long run, as the world's leading companies are now using its technology. There was a time when gaming was Nvidia's biggest source of revenue. Then came data centers and AI, and this discussion suggests that automotive could become the next big play for the company. Investors, however, will do well to note that AI is likely to remain a top growth driver for Nvidia for a long time to come. The company dominates the market for data center graphics cards, putting it in a terrific position to capitalize on secular growth trends such as accelerated computing and AI inference. Moreover, it is making a dent in the enterprise AI software market as well. All this explains why analysts have continued raising their earnings growth expectations from this semiconductor giant over the past few months. So, the arrival of additional catalysts should ideally help Nvidia sustain strong levels of bottom-line growth in the long run, which is why buying this tech stock right now could turn out to be a smart move, since it trades at an attractive 26 times forward earnings. 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The Motley Fool has a disclosure policy. 300 Billion Reasons to Buy Nvidia Before This Budding Business Becomes a Giant was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
28-02-2025
- Automotive
- Yahoo
Nvidia's auto business doubled last quarter. Here's why CEO Jensen Huang believes it's just the beginning.
Nvidia's (NVDA) juggernaut Blackwell chip business, of course, gets all the headlines. But flying under the radar is Nvidia's auto business, which is beginning to make some waves. And it's just getting started. Case in point: "Fourth-quarter Automotive revenue was $570 million, up 27% from the previous quarter and up 103% from a year ago. Full-year revenue rose 55% to $1.7 billion," Nvidia revealed in its latest earnings release on Wednesday night. 'Nvidia's automotive vertical revenue is expected to grow to approximately $5 billion this fiscal year,' Nvidia CFO Colette Kress said on the earnings conference call. Nvidia's foray into the automotive sector is nothing new, but the drumbeat of news coming from the business has picked up recently. Take CES last month, for example, where the company highlighted the business. "In order to build a self-driving car, you need to train a mountain of data, video data," Nvidia CEO Jensen Huang said in an interview with Yahoo Finance from CES, explaining that Nvidia's graphics chips can be used not just for video games, but for simulations to train autonomous vehicles. "If just right now where the self-driving car business is, if it's already a $5 billion business for us, imagine how big it's going to be when we have a hundred million new cars per year. A trillion miles driven per year. This is likely going to be one of the largest robotics industries in the world and one of the largest computing industries in the world," Huang said. The company made a slew of news this quarter and at CES on the automotive front. Nvidia announced that Toyota (TM) — the world's largest automaker — will begin using the company's DRIVE AGX Orin chip and the Nvidia DriveOS operating system to power advanced driver assistance features in its next-generation vehicles. Nvidia said German tire and auto supplier Continental and self-driving truck company Aurora (AUR) would also use Nvidia's DRIVE hardware and DriveOS software in Aurora's level 4 autonomous driving system, Aurora Driver. Continental and Aurora plan to bring autonomous trucks hauling freight to roads beginning in 2027. And Korea's Hyundai Motor Group announced it would use Nvidia technologies to accelerate AV and robotics development, as well as smart factory initiatives. And those are just new updates. Nvidia chips are already used to power self-driving technologies at Mercedes (MGBAF), Volvo ( China's BYD (BYDDY), and device maker Foxconn, for example, and Nvidia chips power some of Tesla's supercomputers too. The confluence of supercomputing and robotics (like cars, for example) is one of the next big frontiers for AI. Huang calls it physical AI, or embodied AI, where physical objects harness AI to interact with the real world. 'More than any other factor, the growing investor interest in embodied AI has been driven by recent advancements in genAI/supercomputing,' Morgan Stanley analyst Adam Jonas wrote in a research note in late January. Advancements in AI — whether inspired by OpenAI, DeepSeek, or others — will help the millions of vehicles around the globe that are using self-driving software, and likely powered by Nvidia's Drive OS and hardware. While the future of autonomous and other physical AI will be exciting from a tech capabilities standpoint, it could also be lucrative for investors. "The [autonomous vehicle] revolution has arrived," Huang said during his CES keynote. "I predict that this will likely be the first multitrillion-dollar robotics industry." Pras Subramanian is a reporter for Yahoo Finance. You can follow him on X and on Instagram.
