Use instances revolving round synthetic intelligence (AI) are exploding. Each business is in search of to leverage the expertise in some style. Whereas the speedy tempo of innovation is thrilling, it is price noting that some AI functions shall be extra impactful than others.
One key alternative is autonomous driving. As soon as an idea reserved for science fiction, some of the world’s largest companies, together with Tesla and Alphabet, at the moment are main the cost within the improvement of self-driving expertise.
Nevertheless, there’s one other member of the “Magnificent Seven” that can also be enjoying an integral function on the intersection of AI and vehicles: Nvidia (NASDAQ: NVDA).
How does autonomous driving work?
At a excessive degree, fashionable autos have gotten large computer systems with built-in software program studying to function these autos identical to a human driver. This course of is an instance of machine learning.
Tesla’s automobiles, for instance, come geared up with an array of cameras and sensors. These gadgets are consistently monitoring highway maps, climate situations, site visitors patterns, and extra.
These data are then sent back to a supercomputer that processes the data at scale. The tip result’s that Tesla has created a software program program it might probably combine into its fleet that gives house owners the choice to have the automotive drive itself.
Picture supply: Getty Pictures.
How is Nvidia concerned in autonomous driving?
Nvidia is generally recognized for its graphics processing items (GPU) and information heart companies. GPUs are used for quite a lot of generative AI functions, together with autonomous driving. These semiconductor chips are able to immense computing energy. Their capability to course of a great deal of info at a excessive fee makes them essential to AI fashions.
Proper now, Nvidia’s most in-demand GPUs embrace its A100 and H100 chips. Throughout Tesla’s first-quarterearnings name CEO Elon Musk spoke in regards to the firm’s self-driving expertise. He informed buyers that Tesla at present makes use of 35,000 H100 chips, and “we count on that to be most likely 85,000 or thereabouts by the tip of this yr.”
Though the precise worth level of the H100 fluctuates, a number of media retailers report these chips can price round $40,000. Utilizing the figures from above, which means Tesla might be spending $2 billion on Nvidia GPUs simply this yr.
Contemplating Nvidia owns an estimated 80% of the AI chip market, it is possible the seller of alternative among the many numerous corporations pursuing self-driving expertise. Nvidia is a multibillion-dollar alternative from autonomous driving alone.
Is Nvidia inventory purchase proper now?
The chip large has been on the heart of the AI-fueled hype within the inventory market. Shares soared 239% in 2023, and they’re up one other 70% to this point this yr. Buyers ought to concentrate on the dangers from buying into momentum, however as Nvidia’s income soars to report ranges, income and free money movement have climbed even sooner.
Contemplating the event of autonomous driving expertise continues to be in its early phases, I see the traits above as encouraging. Widespread adoption of self-driving automobiles is years away, and but, Nvidia is already making billions off the chance, one that ought to solely develop as autonomous driving turns into more and more mainstream.
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Suzanne Frey, an govt at Alphabet, is a member of The Motley Idiot’s board of administrators. Adam Spatacco has positions in Alphabet, Nvidia, and Tesla. The Motley Idiot has positions in and recommends Alphabet, Nvidia, and Tesla. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially mirror these of Nasdaq, Inc.
