Use cases relating to artificial intelligence (AI) are increasing explosively. Every industry is trying to leverage technology in some way. While the high pace of innovation is exciting, it is worth noting that some AI applications will be more impactful than others.
Autonomous driving is a big opportunity. Once a concept reserved for science fiction, some of the world’s largest companies, including Tesla And alphabetare now leaders in the development of self-driving technology.
However, there is another member of the “Magnificent Seven” who also plays an essential role at the intersection of AI and automobiles: Nvidia (NASDAQ:NVDA).
How does autonomous driving work?
At a high level, modern vehicles are becoming giant computers with built-in software that learn to operate these vehicles like a human driver. This process is an example of machine learning.
Tesla’s cars, for example, are equipped with a number of cameras and sensors. These devices constantly monitor road maps, weather conditions, traffic patterns, and more.
This data is then sent back to a supercomputer, which processes the information on a large scale. The end result is that Tesla has developed a software program that it can integrate into its fleet and offer owners the ability to let the car drive itself.
How is Nvidia involved in autonomous driving?
Nvidia is best known for its graphics processing units (GPU) and data center services. GPUs are used for a variety of generative AI applications, including autonomous driving. These semiconductor chips have enormous computing power. Their ability to process large amounts of information at high speeds makes them essential for AI models.
The most popular GPUs from Nvidia right now include the A100 and H100 chips. During Tesla’s first quarter earnings call, CEO Elon Musk talked about the company’s self-driving technology. He told investors that Tesla is currently using 35,000 H100 chips and “we expect it will probably be around 85,000 by the end of this year.”
Although the exact price of the H100 varies, several media outlets report that these chips can cost around $40,000. Based on the numbers above, that means Tesla could spend $2 billion on Nvidia GPUs this year alone.
Considering that Nvidia owns an estimated 80% of the AI chip market, it is likely the vendor of choice among the various companies pursuing self-driving technology. Nvidia sees a billion-dollar opportunity in autonomous driving alone.
Is Nvidia stock a good buy right now?
The chip giant was at the center of the AI-driven hype on the stock market. Shares rose 239% in 2023, and they’re up another 70% so far this year. Investors should be aware of the risks involved in buying Momentum, but with Nvidia’s revenue rising to record levels, profits and free cash flow have increased even faster.
Given that the development of autonomous driving technology is still in its early stages, I think the above trends are encouraging. The widespread adoption of self-driving cars is still years away, and yet Nvidia is already making billions from this opportunity, which is only expected to grow as autonomous driving becomes more mainstream.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions at Alphabet, Nvidia and Tesla. The Motley Fool has positions in and recommends Alphabet, Nvidia and Tesla. The Motley Fool has a disclosure policy.
Interested in self-driving cars? This company will be the biggest winner (hint: it’s not Tesla). was originally published by The Motley Fool