Jensen Huang is the CEO of Nvidia(NASDAQ:NVDA)a company whose chips power the vast majority of artificial intelligence (AI) systems. At a technology conference last year, Huang made a bold statement: “The next wave of AI is here. Robotics, powered by physical AI, will revolutionize industries. »
Elon Musk, CEO of Tesla(NASDAQ:TSLA)made a related prediction last year: “I think that by 2040 there will probably be more humanoid robots than humans.”
With this in mind, Citi Group analysts estimate that sales of humanoid robots will reach $14 billion by 2030, $1.1 trillion by 2040, and $7 trillion by 2050. And some Wall Street experts see huge returns on the horizon for Nvidia and Tesla shareholders:
Equity analyst Beth Kindig estimates that Nvidia could become a $10 trillion company by 2030. That implies an upside of about 185% from its current market value of $3.5 trillion. If that happens, Nvidia stock will return 19% annually over the next six years.
Billionaire fund manager Ron Baron says Tesla could become a $5 trillion company within a decade. This implies an upside of around 315% from its current market value of $1.2 trillion. If this comes to fruition, Tesla shares will return 15% annually over the next 10 years.
Here’s what investors should know about Nvidia and Tesla.
Nvidia is best known for its graphics processing units (GPUs)chips that accelerate complex data center workloads, like running artificial intelligence (AI) applications. Nvidia accounts for 98% of data center GPU sales, and its dominance is largely due to its ecosystem of software development tools called CUDA.
Nvidia Isaac is a bot development platform built on CUDA. It includes code libraries and pre-trained models that help engineers create robotic applications in three distinct use cases: industrial manipulator arms, autonomous mobile robots, and humanoid robots. Isaac also includes a simulation engine that allows developers to generate synthetic training data and test robotic models.
Beyond the data center, Nvidia Jetson systems are embedded chips that bring together GPUs, central processing units (CPUs), memory and storage to form the third and final layer of the robotic computing stack. To elaborate, GPU-accelerated servers provide the supercomputing infrastructure needed to train AI models, Isaac provides the tools needed to build robotic applications, and Jetson systems provide the computing power autonomous robots need to operate .
Nvidia GPUs power most generative AI systems, so investors have reason to believe that these chips will also form the basis of most physical AI systems. While generative AI can create new content, physical AI can understand and interact with the physical world. In other words, physical AI is the technology that will power autonomous robots.
Wall Street expects Nvidia’s adjusted earnings to grow 52% annually through fiscal 2026, which ends in January 2026. That makes the current valuation of 55 times adjusted earnings very reasonable. Patient investors should feel comfortable purchasing a small position in this stock today.
Tesla is best known as the market leader in electric cars, but its CEO Elon Musk told analysts earlier this year: “We should be considered an AI or robotics company.” Tesla designed the supercomputing hardware that powers its Full Self-Driving software and applied that hardware to a humanoid robot called Optimus.
Musk recently said Optimus was “by far the most advanced humanoid robot.” Importantly, even though he sees huge benefits in self-driving technology, Musk believes Optimus will ultimately be more valuable than all of Tesla’s other products combined. He even speculated that Optimus could increase Tesla’s market value to $25 trillion.
Musk expects “several thousand Optimus robots” to work in Tesla factories this year and says the company will begin selling Optimus to customers as production ramps in 2026. Musk has made big promises on unrealistic time frames in the past, so investors should not take these projections into account. engraved in stone. However, he ends up keeping his promises.
Wall Street expects Tesla’s adjusted earnings to grow 27% annually through 2025. This consensus makes the current valuation of 170 times adjusted earnings absurd. But patient investors who believe Tesla can monetize self-driving technology and humanoid robots should absolutely have a position. Start with a few stocks today and add more when the stock price falls.
Have you ever felt like you missed the boat by buying the best performing stocks? Then you will want to hear this.
On rare occasions, our team of expert analysts issues a “Doubled” actions recommendation for businesses that they believe are on the verge of collapse. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Nvidia:If you invested $1,000 when we doubled down in 2009,you would have $374,613!*
Apple: If you invested $1,000 when we doubled down in 2008, you would have $46,088!*
Netflix: If you invested $1,000 when we doubled down in 2004, you would have $475,143!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
Citigroup is an advertising partner of Motley Fool Money. Trevor Jennevine has positions in Nvidia and Tesla. The Motley Fool ranks and recommends Nvidia and Tesla. The Motley Fool has a disclosure policy.
