Nvidia’s Growing Automotive Business
Flying under the radar of Nvidia’s (NVDA) AI demand-fueled earnings report was one of the chipmaker’s smaller, but growing, businesses: automobiles.
Q1 Earnings and Revenue Growth
Nvidia reported that its automotive revenue for the first quarter surged to $567 million, reflecting a remarkable 72% increase compared to the same period last year. In fact, the company observed that automotive revenue nearly doubled in the previous quarter, primarily driven by sales of hardware and software systems utilized in autonomous driving technologies.
Driving Factors Behind Growth
“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],” indicated Nvidia’s CFO, Collette Kress, during the Q1 earnings call. “Furthermore, we are now in production with our full-stack solution for Mercedes Benz, starting with the new CLA [sedan], which will be hitting the roads in the next few months.”
Full-Stack Solutions Explained
Nvidia’s “full-stack” solutions integrate both hardware, such as the DRIVE AGX Orin chips, and software platforms like DriveOS to enable advanced driver assistance and other high-tech features in next-generation vehicles. This comprehensive approach places Nvidia at the heart of the automotive industry’s push towards increased autonomy and smarter vehicle technology.
Advancements in Manufacturing
In addition to its automotive advancements, Nvidia is leveraging its technologies to enhance manufacturing processes by streamlining assembly lines and implementing artificial intelligence in factory robots. Several industry giants, including GM and Hyundai, are set to deploy Nvidia’s innovations for their “smart factory” initiatives, as Kress noted back in March of this year.
The Potential of Automotive Revenue
The automotive division is projected to significantly contribute to Nvidia’s overall revenue. While data centers and gaming often dominate attention, the automotive sector is poised to become an increasingly vital part of the company’s growth narrative. “Nvidia’s automotive vertical revenue is expected to grow to approximately $5 billion this fiscal year,” Kress stated during the Q4 earnings call held in late February.
Partnerships with Major Automakers
Earlier this year, Nvidia announced that Toyota—the largest automaker globally—would be utilizing its self-driving technology as well. This partnership highlights the industry’s growing reliance on Nvidia’s innovative solutions to power the next generation of vehicles.
Widespread Adoption of Nvidia’s Technology
Nvidia’s chips are already central to the development of self-driving technologies across a variety of major automotive brands such as Mercedes (MBGAF), Volvo (VOLCAR-B.ST), and even Chinese automaker BYD (BYDDY). Renowned device maker Foxconn (FXCOF) also integrates Nvidia technology. Furthermore, certain Tesla (TSLA) supercomputers rely on Nvidia chips, underscoring the company’s expansive footprint in both automotive and computing sectors.
The Intersection of AI and Robotics
The fusion of supercomputing and robotics marks one of the next major frontiers for artificial intelligence (AI). CEO Jensen Huang refers to this domain as physical or embodied AI, where tangible objects like cars and robots leverage AI to interact within the real world—illustrated perfectly by self-driving vehicles and factory robots navigating their environment. This intersection presents a significant opportunity for innovation and growth.
Future Endeavors and Collaborations
During this year’s CES, Huang mentioned that the autonomous vehicle “revolution” and embodied AI is expected to be the first multitrillion-dollar opportunity within robotics. This week, he reaffirmed Tesla as a key partner in these advancements.
An Eye on Tesla and Future Technologies
“We conduct substantial business with Tesla and xAI,” Huang stated in an interview with Bloomberg following Nvidia’s recent earnings release. He projected, “We’re going to build many more computers together. [CEO Elon Musk’s] self-driving car and his Optimus robot, both of which are world-class and revolutionary.” Such collaborations point toward the exciting potential of artificial intelligence in reshaping how we perceive transportation and manufacturing.
