Nvidia’s (NVDA) recent market trouncing performance has rested on several key drivers. Namely, the outstanding growth of its data center segment, which over the last few quarters has been closing the gap on Nvidia’s biggest revenue generator, gaming, and a “friendly” macro environment which has played to the GPU leader’s strengths.
However, Nvidia has fingers in many pies, and is banking on several secular trends which are expected to ramp up in the 2020s. Along with making waves in the AI sector, the company is one of the leading players in the rising autonomous vehicle category.
For Needham analyst Rajvindra Gill, the investment firm’s recent Annual Automotive Technology Day was an opportunity to get closer acquainted with Nvidia’s “comprehensive end-to-end solution for all levels of ADAS/AV.”
The 5-star analyst was not disappointed, and said, “We believe that one of NVDA’s key differentiators in automotive is that its NVIDIA DRIVE is the industry’s only end-to-end platform from cloud to car and back to the cloud. NVIDIA DRIVE’s end-to-end software-defined autonomous driving platform begins in the data center with the collection, archiving, and curation of data through the use of its algorithms. Once the data is collected, it is used to train models and then validated through simulation on the same architecture and then goes into the vehicle.”
Gill also points out DRIVE’s ability to run on a single, scalable architecture sets it apart from some of its peers, regardless of whether customers use it for L2 (level 2)+ ADAS (advanced driver assistance systems) or L4 completely autonomous driving applications. The ability to perform different tasks, from development and testing to validation for different applications on just one platform allows customers to save both time and money.
Additionally, unlike competitors such as Intel’s Mobileye, DRIVE offers an “open software platform,” which lets developers use Nvidia’s OS, libraries, and algorithms to personalize their own applications.
Nvidia’s automotive business currently only makes up between 6-7% of total revenue. However, there’s a big opportunity in the space as Nvidia believes the TAM (total addressable market) of the automotive sector will be worth $30 billion by 2025.
Unsurprisingly, Gill is backing Nvidia and has a $400 price target to go with his Buy rating. Investors could be pocketing a 13.5% gain, should Gill’s forecast play out. (To watch Gill’s track record, click here)
Nvidia has strong backing from the rest of the Street, too. 27 Buys, 3 Holds and 1 Sell add up to a Strong Buy consensus rating. There’s upside of 8%, should the $379.58 average price target be met in the year ahead. (See Nvidia stock analysis on TipRanks)
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