Nvidia (NASDAQ:NVDA) roiled the stock market today after revealing it had taken a $24.6 million stake in Chinese autonomous vehicle stock WeRide (NASDAQ:WRD).
In a Form 13F-HR filed with the Securities & Exchange Commission, the artificial intelligence chipmaker said it had bought more than 1.7 million shares of WRD stock, which sent the AV company soaring 130% when the market opened.
While shares have eased back some of those gains (the stock was up 92% in midday trading), it should have shocked the market so much that Nvidia would buy into the AV market.
24/7 Wall St. Insights:
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Nvidia (NVDA) surprised the market with a big, $24 million investment in Chinese self-driving car company WeRide (WRD)
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However, the AI chipmaker has been pointing out for some time that autonomous vehicles are an area of special interest to it.
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With WeRide being one of the leading AV companies globally, the investment was not surprising.
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Driving head-on into self-driving autos
Although WeRide may have been the surprise choice of Nvidia, the AI stock has more than hinted that it wanted to expand its presence in the automotive industry. As cars increasingly advance technologically and automakers develop more electric and autonomous vehicles, Nvidia products and services are seeing strong demand growth from the industry.
In the third quarter, Nvidia CFO Collete Kress said the company’s automotive segment saw revenue rise 72% year-over-year to $449 million. While that’s a very small part of total revenue, the AI stock sees more room to grow.
She noted the self-driving vehicle makers were incorporating Nvidia Orin, its family of embedded AI computers that includes the DRIVE Orin system-on-a-chip (SoC) and the Jetson Orin modules.
Nvidia is working with auto manufacturers and Tier 1 parts suppliers to further develop its Av and EV platforms. It has been a major chip supplier to Tesla (NASDAQ:TSLA) and recently expanded its collaboration with Volvo (OTC:VLVLY) for EX90, a fully electric vehicle built on its DRIVE Thor platform that integrates its latest Blackwell GPU architecture.
China leading the way
Yet there were hints that WeRide would be the AV maker of choice. In December, Bloomberg reported Nvidia was beginning to invest heavily in the automotive market, especially in China.
It reported a jump in hiring over the past year, with the number of employees in the segment rising 33%. It would start 2025 with 4,000 employees working in the Chinese automotive market.
Moreover, Nvidia added 200 employees in Beijing to focus on self-driving vehicles while also expanding its after-sales service and networking software development teams. That’s key because China is testing more autonomous vehicles than any other country.
WeRide is also the leading AV operator in China, with a presence in 30 cities across nine countries. It is looking to expand further into Japan, Europe, and the Middle East.
That Nvidia chose to invest in WeRide seems to be logical.
A massive opportunity
Nvidia has estimated the autonomous machine market, which includes automotive applications, represents a $300 billion opportunity over the long term.
S&P Global Mobility says the AV market is set to explode. It forecasts the semiconductor value per car will surge from $500 per vehicle in 2020 to $1,400 per vehicle by 2028, a near 14% compounded annual growth rate.
This suggests that as vehicles become more technologically advanced, demand for Nvidia’s products will rise in kind.
The future of autos
Although data centers will undoubtedly remain one of the biggest driving forces for artificial intelligence advances for the foreseeable future, self-driving automobiles represent a target rich environment.
As the leading AI chipmaker with the most complex advanced AI accelerators, Nvidia is going to be walking lockstep with the market’s growth.
We can see how Nvidia’s thinking is rapidly evolving. Where voice communication was seen as a natural extension of AI, it invested in SoundHound AI (NASDAQ:SOUN), an investment that catapulted the voice recognition expert into the stratosphere.
Yet along with its investment in WeRide, Nvidia sold off its entire stake in SOUN stock. SoundHound is crashing even as WeRide rises.
There is some surprise that it also dumped its stake in Serve Robotics (NASDAQ:SERV). Nvidia has said that robotics is the next stage in AI’s growth trajectory as agentic AI follows generative AI.
Yet targeting investments for the immediate future may be what directed the chipmaker’s decision in what to buy, what to hold, and what to sell. Whatever the reason, though, Nvidia buying WeRide stock was not a surprise.
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