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NVIDIA Focuses on Robotics to Fuel Growth, Opens Research Lab

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NVIDIA (NVDA - Free Report) , which ended 2018 on a dull note, is now focusing on Artificial Intelligence (AI) and Robotics to turn around its flagging fortunes.

Notably, lower demand for GPUs due to fall in crypto-related demand dealt a massive blow to the stock, making it one of the worst performers in the past year. Therefore, the company’s investment in long-term growth opportunities like Robotics and AI as compared to its last adventure with short-lived cryptocurrency raises hope of recovery.

Price Performance

Shares of NVIDIA have plunged 31.9% in the past year, wider than the industry’s 9.4% decline and the S&P 500 Composite’s 7% fall.

Growing Efforts in Robotics

The company’s endeavors to tap the growing robotics industry are evident from the new lab that it opened in Seattle, which is likely to serve as a home ground for developing all its robotics projects.

Reportedly, the lab is working on a dozen robotics projects including a “kitchen manipulator” robot or “cobots” that will work alongside humans.

NVIDIA expects the lab to enable next-generation robots to operate in open-ended environments not designed specifically for them.

Dieter Fox, NVIDIA’s Senior Director of Robotics Research, stated, “By pulling together recent advances in perception, control, learning and simulation, we can help the research community solve some of the greatest challenges in robotics.”

Notably, last year, NVIDIA unveiled Isaac, a platform consisting of a virtual simulator for robots. The platform is equipped with NVIDIA Jetson Xavier, the world’s first computer designed specifically for robotics.

Bullish Projections Bode Well

In robotics industry, collaborative robots (cobots) are likely to experience rapid growth in factories, hospitals and within the confines of one’s house or more particularly in the kitchen. Per Markets and Markets research, the cobots market is expected to reach $4.28 billion by 2023, witnessing a CAGR of 56.94%.

In a recent report, IDC projected that worldwide spending on robotics will be around $103.4 billion in 2019. By 2022, IDC anticipates this spending to see a CAGR of 18.9%.

The firm added that spending on robotics systems will be dominated by hardware purchases with nearly two-thirds of all spending going toward robotic systems, after-market robotics hardware and system hardware. Robotics-related software spending is forecast to rise at a slightly faster rate (21.7% CAGR) than services (19% CAGR) or hardware spending (18.2% CAGR).

Discrete manufacturing will account for half the robotics system spending in 2019. Per IDC, it will be followed by process manufacturing, resource industries, healthcare and consumers.

NVIDIA, which is likely to develop cards and software for the external robotics manufacturers, is expected to reap benefits of this growing market.

Zacks Rank and Stocks to Consider

Currently, NVIDIA has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Computer and Technology sector are Synopsys, Inc.(SNPS - Free Report) , Cloudera and Verint Systems Inc. (VRNT - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for both Synopsys and Verint is projected to be 10% while the same for Cloudera stands at 8%.

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