Nvidia showed off a new version of its self-driving platform at its GTC developer conference this week. Automotive is a small segment of the company’s business. But it gets a lot of attention from Nvidia founder and CEO Jensen Huang.
At the conference, Huang touted the company’s $11 billion vehicle technology order pipeline over the next six years. But he says that’s only part of the potential market for self-driving technologies and their importance to Nvidia (NVDA).
“Automotive will surely be our next multi-billion dollar business,” he said in an interview with Yahoo Finance Presents. “The $11 billion is going to be pretty big business for us just in the car. But if you look at all of AV, I think it’s going to be one of the biggest AI industries in the world. During GTC, Nvidia estimated the potential market for automotive-related data center software, hardware and services at $300 billion.
He has a long way to go. To put Nvidia’s current automotive-related sales into context, the company’s total revenue in the past fiscal year grew 61% to nearly $27 billion. The automobile accounted for 566 million dollars, or 2%.
Nvidia has signed contracts with automakers Lucid (LCID), BYD (BYDDY), Mercedes-Benz (MBG.DE), and Jaguar/Land Rover, for its drive systems, targeting ship dates to those customers during of the next few years.
Huang broke down the four functions or computers that will be needed to enable autonomous driving:
– “You need a computer that maps the fleet;”
– “Second, you need to train the AI, the training of the system;”
– “Thirdly, before deploying the fleet on the road, you would like to have a digital twin of this fleet.” In other words, a virtual version of the fleet would exist in the metaverse (or, in Nvidia’s case, what it calls the Omniverse), and the cars would learn to drive in a virtual environment before being downloaded into a physical car.
– Omniverse also has a data center, the fourth computer in its calculation.
Investors and analysts have been excited about Nvidia’s plans, not just for the automobile, but also for its Grace superchip and other new products. The stock rallied ahead of and following the GTC conference, for a total gain of almost 30% since mid-March. (It’s still about 17% below its all-time high close of $333.76 on Nov. 29).
The optimism isn’t just about the driving technologies themselves, wrote Susquehanna’s Christopher Rolland in a note to investors: “Automotive growth is driven by their entry into autonomous driving and supported by their dominance in top range, an area that we believe could be as large and profitable as autonomous driving.
Nvidia estimates the total addressable market across all of its businesses – including gaming, data center, software and automotive – at $1 trillion. As Bernstein analyst Stacy Rasgon wrote after the conference. “These numbers are of course quite nebulous, but we don’t really care; rather, what matters is whether investors can be confident that the long-term opportunity is significant relative to the current pace of business operation. We believe this remains the case.
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