Buried in Nvidia’s (NASDAQ: NVDA) spectacular earnings were the figures, which are its “automotive” revenue. It is not a massive number. At $567 million, it was up 72% from the same period last year. It is growing faster than Nvidia’s top line.
Nvidia made a point of describing its success and what it views as a bright future. CFO Collette Kress said, on the earnings call, “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. 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 Gets On The Road
Kress added, “Nvidia’s automotive vertical revenue is expected to grow to approximately $5 billion this fiscal year.” Nvidia has customers who are part of the gold standard of the global car industry. These will soon include Hyundai and GM (NYSE: GM). Its DRIVE AGX Orin acts as the hardware. Its DriveOS software supports self-driving features. Nvidia readily admits that another customer, Tesla, has the early lead in the sector.
Self-driving remains the Holy Grail. At least 80 million new cars are expected to be sold this year. After a house, this is often a person or family’s most significant expense. Self-driving cars have been a goal of the sector for decades.
The self-driving segment has undergone rapid development. The technology to map roads via GPS has been in place for years. Tesla (NASDAQ: TSLA) and Google’s Waymo have unlocked much of the balance. It won’t take much technical expertise to get this over the finish line.
EV Future
One question that remains unanswered is whether there is a direct relationship between electric vehicles (EVs) and self-driving features. The answer is probably not. EV growth is well under forecast, except in China. Fossil fuel engines could dominate the global market for years, if not for decades.
Ultimately, the engine is not the key to the success of self-driving. As Tesla is finding, it is how well the technology works and how quickly regulators will approve it.
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