NVIDIA Corp (NVDA)

[DiscoverGold]

NVIDIA's Worst-Performing Business Could Take Off Like Its Data Center Segment Did
By: The Motley Fool | May 3, 2021

Though NVIDIA (NASDAQ: NVDA) has been flying high and delivering rapid revenue and earnings growth over the past few quarters, the graphics processor specialist's automotive business has thus far been failing to click.

For its fiscal 2021, which ended Jan. 31, the chipmaker booked automotive revenue of just $536 million, which amounted to just over 3% of its top line. What investors might find more alarming is that NVIDIA's automotive revenue dropped by 23% in fiscal 2021. It was the company's worst-performing business segment. Contrast those results with its highly successful data center business, which more than doubled its revenue during the year and accounted for 40% of the company's top line.

But don't be surprised to see NVIDIA's automotive business pick up the pace in the coming quarters. It could even emulate the astounding growth of the data center segment, which accounted for only 12% of NVIDIA's total revenue four years ago but has grown by leaps and bounds thanks to a huge end-market opportunity.

NVIDIA claims to be sitting on a massive automotive opportunity

NVIDIA says that it has a pipeline of automotive design wins worth more than $8 billion spread over the next six years. The company has partnered with several players across different automotive verticals, including established manufacturers such as Mercedes-Benz, Audi, Hyundai, and Volvo.

Additionally, truck-making giants such as Navistar and new electric vehicle providers such as Nio and Faraday Future have also struck partnerships with the chipmaker. And it has inked deals with robotaxi providers such as Cruise and DiDi. These companies have signed up to use NVIDIA's DRIVE AGX platform, the capabilities of which have increased markedly over the years.

NVIDIA's DRIVE AGX Orin platform, which is expected to go on sale next year, is a huge improvement over the current Xavier system-on-a-chip (SoC). NVIDIA claims Orin's performance is eight times better than its predecessor system, as it can process 254 trillion operations per second as compared to Xavier's 30 trillion.

The Orin architecture is designed to support autonomy systems from Level 2 vehicles (partial automation/advanced driver assistance systems) to Level 5 vehicles (full autonomy). This allows NVIDIA's customers to utilize a single scalable architecture upon which they can develop multiple systems. NVIDIA plans to push the envelope further in the coming years with its recently revealed DRIVE Atlan autonomous vehicle platform, which is expected to deliver four times the performance of Orin. NVIDIA says that Atlan could make its way into production model vehicles in 2025.

The potential financial impact

Given the number of companies collaborating with NVIDIA to use the Orin platform, which is expected to be used in production vehicles beginning in 2022, investors can expect its automotive business to start gaining traction next year. The arrival of Atlan three years later should provide sustained momentum...

Read Full Story »»»

DiscoverGold