Tesla attracts a lot of attention to its autonomous driving software, but I see another company as the best opportunity for cars powered by the long -term AI.
When you think about how artificial intelligence (AI) storm the world, my mind is almost instantly starting to think about the impact of technology on areas such as data analysis or discovery of drugs.
Although these use cases tend to recover the most attention, AI has also played a major role in the automotive industry. From vocal recognition assistants to the rise of autonomous driving, AI opens the way to the future of transport.
Let’s explore how Nvidia (NVDA -1.51%)) is involved in the automotive sector and evaluates why I see the company as my first choice Tesla at the intersection of AI and cars.
How is Nvidia involved in the automotive industry?
NVIDIA offers a number of products and services sold to the automotive industry. For example, the company’s omaverse platform allows companies to build digital intellectual twins of the real world to simulate how vehicles can work under certain conditions (that is to say the weather, traffic, pedestrians walking on the road).
In addition, the NVIDIA Halos system combines the brand and the model of a car with the appropriate hardware and software development necessary in order to provide autonomous capabilities of the prototype to the functional product.
The main role of NVIDIA in the automotive sector is to help bring a technology -oriented layer to the car manufacturing process – inaugurate a new wave of security and profitability.
Image source: Getty Images.
Keep an eye on NVIDIA automotive growth
According to the company’s website, NVIDIA lends its AI services to a number of best automotive companies, especially Rivian,, Toyota,, Byd,, Mercedes-BenzAnd Hyundai. Although this is impressive, I think that Nvidia’s most notable decision in the automotive sector took place earlier this month at the company’s GTC conference.
During the conference, Nvidia revealed that he had associated himself with General Motors Work on a number of solutions fueled by AI for your cars. As part of the agreement, GM will use Nvidia Omivers, Cosmos and Drive AGX platforms to create more advanced systems for drivers, as well as to improve manufacturing efficiency in GM factories.
The table below breaks down Nvidia’s income from its automotive segment during the calendar year 2024:
| Category | Q1 | Q2 | Q3 | Q4 | 2024 |
|---|---|---|---|---|---|
| Auto income | $ 329 million | $ 346 million | $ 449 million | $ 570 million | $ 1.7 billion |
Data source: NVIDIA.
Nvidia automotive segment revenues increased by 55% from one year to the next in 2024. That said, turnover of $ 1.7 billion in this company represents only about 1% of the total turnover of Nvidia last year.
During the call for budget budgetary profits from the company, management guided that the automotive company increases almost three years this year to $ 5 billion in revenues.
Currently, the automotive segment is the fastest activity in Nvidia outside the data centers. And yet, even if we explain this rapid scale, car sales are barely a fraction of the entire NVIDIA operation.
I see the new partnership with GM as a sign that more automotive companies, in particular inherited automakers that may have lagged behind other catalysts supplying the automotive industry such as electric vehicles (EV), are looking for ways to ride a level and bring a new wave of growth sustained by an increase in interest in AI.
Why I see Nvidia as the largest beneficiary of cars supplied by AI
Regarding AI and cars, I cannot think of two other companies in addition to Nvidia and Tesla which have the most potential.
Although Tesla has made significant progress in its autonomous driving ambitions, there is a fairly solid argument to maintain that the future of society depends on the general adoption of its autonomous car software. Without AI, an investor could say that Tesla is simply another car manufacturer and less a technological company. The automotive industry is very competitive and many companies are forced to compete with prices to stimulate demand and sales. In the long term, a strategy like this can reduce beneficiary margins and stifle innovation.
On the other hand, I consider Nvidia as an isolated opportunity with regard to AI and cars. If more vehicles are equipped with AI -powered services, I think Nvidia has an obvious opportunity to disseminate its existing partnerships with car manufacturers to extend its overall presence in the automotive sector.
In other words, a long -term investment in Tesla may require a strong conviction that the company achieves its autonomous driving vision. On the other hand, Nvidia does not necessarily need Tesla to succeed – because the company has the luxury of associating with a multitude of automobile companies from around the world that seek to build their IA roadmaps.
For these reasons, I consider NVIDIA as the largest beneficiary of autonomous driving and services supplied by AI in the automotive industry compared to competition.
Adam Spatacco has positions in Nvidia and Tesla. The Motley Fool has positions and recommends Nvidia and Tesla. The Motley Fool recommends Byd Company and General Motors. The Motley Fool has a policy of disclosure.
