NVIDIA Bullish on Auto Chip Business as Next Driver: Can It Deliver?

Core Insights - NVIDIA Corp. has identified the automotive industry, particularly self-driving and new energy vehicles, as a significant growth opportunity for its generative AI-enabled GPUs [1][2] Automotive Revenue Growth - In the first quarter of fiscal 2026, NVIDIA's automotive revenues increased by 72% year over year, reaching $567 million [2][9] - The company anticipates automotive segment revenue to exceed $5 billion in fiscal 2026, with CEO Jensen Huang expressing optimism about the potential for this business to evolve into a multitrillion-dollar opportunity [2][9] AI Infrastructure and Partnerships - NVIDIA has introduced new AI infrastructure aimed at enhancing advanced driver-assistance systems, autonomous vehicles, and robotics [3] - The company has commenced production of its "full-stack" solutions for Mercedes Benz, integrating its DRIVE AGX Orin AI chips with DriveOS software for next-generation vehicles [3][4] - Other automotive manufacturers, including Volvo and BYD, are also utilizing NVIDIA's chips, and the company's AI-enabled factory robots are being deployed to optimize assembly lines for General Motors and Hyundai [4][9] Competitive Landscape - Alphabet Inc.'s Waymo is rapidly expanding its self-driving vehicle services, currently providing around 250,000 rides per week and exploring new city expansions [5] - Intel Corp. has launched its second-generation AI-powered software for automotive systems on chip (SOC), which aims to enhance performance and efficiency in connected vehicles [6] Stock Performance and Valuation - Year to date, NVIDIA's shares have risen by 5.7%, outperforming the S&P 500's 0.8% increase [7] - The company trades at a forward price-to-earnings ratio of 32.40X, closely aligned with the industry average of 32.80X [10] - Recent earnings estimate revisions have shown positive trends for NVIDIA, with improvements noted for the upcoming quarters and fiscal years [11]