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NVIDIA Bullish on Auto Chip Business as Next Driver: Can It Deliver?
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Key Takeaways
NVDA's automotive revenue surged 72% YoY to $567M in Q1, targeting a multitrillion-dollar opportunity.
NVIDIA's full-stack AI chips are now in production for Mercedes Benz, with Volvo and BYD also onboard.
NVDA chips and robots are powering Tesla supercomputers and auto factories for GM and Hyundai.
NVIDIA Corp. (NVDA - Free Report) has identified a hidden gem for its highly demanded generative artificial intelligence (AI) enabled GPUs (graphical processing units) or chips. Aside from the robust business of data centers and gaming, the automobile industry, especially the self-driving and new energy vehicles, is turning out to be the next catalyst.
In the last reported first-quarter of fiscal 2026, automotive revenues jumped 72% year over year to $567 million. NVDA is expecting automotive segment revenue to cross $5 billion in fiscal 2026. CEO Jensen Huang is highly optimistic as this business could become a multitrillion-dollar opportunity in the future.
NVIDIA unveiled new AI infrastructure for robotics. The company is increasingly focusing on powering advanced driver-assistance systems, autonomous vehicles, and robotics. NVDA has started the production of its “full-stack” solutions for Mercedes Benz, which combines its DRIVE AGX Orin AI chips with DriveOS software for next-generation vehicles.
In addition to Mercedes Benz, other auto giants like Volvo and China’s BYD are using NVDA’s chips. Moreover, NVDA’s chips are also used in some of Tesla Inc.’s (TSLA - Free Report) supercomputers. NVIDIA is also using its AI-enabled factory robots to upgrade and streamline the assembly line for auto makers like General Motors Co. (GM - Free Report) and Hyundai.
Competition Looms Large in Self-Driving Vehicle Market
Alphabet Inc.’s (GOOGL - Free Report) self-driving business — Waymo — has recently gathered significant pace. GOOGL is scaling up this business, providing around 250,000 rides per week at present. Alphabet is also looking for opportunities to introduce this service to several new cities. Waymo is using GOOGL’s cloud computing, AI infrastructure and mapping data to serve customers.
Recently, Intel Corp. (INTC - Free Report) has unveiled its second-generation AI-powered software for defined vehicles system on chip (SOC). INTC’s SOC will enable automakers to deliver improved performance while increasing demand in connected vehicles, advanced AI capabilities and cost efficiency. INTC’s SOC is the first multi-process node chiplet architecture in the automotive industry.
From a valuation standpoint, NVDA trades at a forward price-to-earnings ratio of 32.40X, mostly in line with the industry average of 32.80X. It carries a Momentum Score of B, Growth Score of A and a Value Score of D.
Image Source: Zacks Investment Research
NVIDIA has seen excellent earnings estimate revisions recently. The Zacks Consensus Estimate for second-quarter fiscal 2026, third-quarter fiscal 2026, full-year fiscal 2026 and full-year fiscal 2027 improved over the last 30 days.
Image Source: Zacks Investment Research
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NVIDIA Bullish on Auto Chip Business as Next Driver: Can It Deliver?
Key Takeaways
NVIDIA Corp. (NVDA - Free Report) has identified a hidden gem for its highly demanded generative artificial intelligence (AI) enabled GPUs (graphical processing units) or chips. Aside from the robust business of data centers and gaming, the automobile industry, especially the self-driving and new energy vehicles, is turning out to be the next catalyst.
In the last reported first-quarter of fiscal 2026, automotive revenues jumped 72% year over year to $567 million. NVDA is expecting automotive segment revenue to cross $5 billion in fiscal 2026. CEO Jensen Huang is highly optimistic as this business could become a multitrillion-dollar opportunity in the future.
NVIDIA unveiled new AI infrastructure for robotics. The company is increasingly focusing on powering advanced driver-assistance systems, autonomous vehicles, and robotics. NVDA has started the production of its “full-stack” solutions for Mercedes Benz, which combines its DRIVE AGX Orin AI chips with DriveOS software for next-generation vehicles.
In addition to Mercedes Benz, other auto giants like Volvo and China’s BYD are using NVDA’s chips. Moreover, NVDA’s chips are also used in some of Tesla Inc.’s (TSLA - Free Report) supercomputers. NVIDIA is also using its AI-enabled factory robots to upgrade and streamline the assembly line for auto makers like General Motors Co. (GM - Free Report) and Hyundai.
Competition Looms Large in Self-Driving Vehicle Market
Alphabet Inc.’s (GOOGL - Free Report) self-driving business — Waymo — has recently gathered significant pace. GOOGL is scaling up this business, providing around 250,000 rides per week at present. Alphabet is also looking for opportunities to introduce this service to several new cities. Waymo is using GOOGL’s cloud computing, AI infrastructure and mapping data to serve customers.
Recently, Intel Corp. (INTC - Free Report) has unveiled its second-generation AI-powered software for defined vehicles system on chip (SOC). INTC’s SOC will enable automakers to deliver improved performance while increasing demand in connected vehicles, advanced AI capabilities and cost efficiency. INTC’s SOC is the first multi-process node chiplet architecture in the automotive industry.
The Zacks Rundown for NVIDIA
Year to date, shares of NVIDIA have advanced 5.7% while the broad-market index — the S&P 500 — rose a mere 0.8%. NVDA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
From a valuation standpoint, NVDA trades at a forward price-to-earnings ratio of 32.40X, mostly in line with the industry average of 32.80X. It carries a Momentum Score of B, Growth Score of A and a Value Score of D.
Image Source: Zacks Investment Research
NVIDIA has seen excellent earnings estimate revisions recently. The Zacks Consensus Estimate for second-quarter fiscal 2026, third-quarter fiscal 2026, full-year fiscal 2026 and full-year fiscal 2027 improved over the last 30 days.
Image Source: Zacks Investment Research