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Artificial intelligence (AI) has long been touted as the next big thing in the technology sector, and its usage is growing each and every day. Over the last few years, NVIDIA CorporationNVDA has been working hard to establish itself in this space and the driverless cars industry.

The graphic chip behemoth unveiled a new AI supercomputer chip designed for self-driving cars called Pegasus at its GPU Technology Conference (GTC) in Europe, yesterday.

This new technology, Pegasus helps to drive fully autonomous robotaxis which can handle the concept of Level 5 self-driving vehicles and uses NVIDIA’s DRIVE PX 2 platform, trained on deep neural networks.

What’s the Specialty?

Pegasus is a system-on-chip (SoC) which is built on the NVIDIA Volta architecture-based GPUs. Pegasus also integrates a new computer vision accelerator aimed for ASIL D certification – the industry’s highest safety level. It also features multiple 10Gbit Ethernet connectors.

Per the company, the new system is capable of delivering 320 trillion operations per second (TOPS) of performance, which is more than 10 times as compared with its predecessor. The company expects making the processor available to automakers and other groups developing self-driving cars in the second half of 2018.

NVIDIA’s Hold in AI

NVIDIA’s foray into the autonomous vehicles and other automotive electronics space has been driving its stock higher since mid-2015. It hasn’t looked back since then and has been continuously bringing in new and more advanced technologies in the space.

Notably, the stock has been clocking solid returns over the past one year and has gained 184.4%, outperforming the industry ‘s gain of just about 41%.

With its sustained focus on developing new and more advanced AI technologies for self-diving cars, we believe that the company is well poised to become a leading provider of technology for autonomous vehicles. Estimates provided by various research firms further encourage us about NVIDIA’s growth prospects in the space.

According to data available from BI intelligence, 10 million self-driving cars will be on the road by 2020. Per Statista, the market for fully autonomous vehicles will grow to almost $6 billion while partially autonomous vehicles market will reach $36 billion by 2025. According to Boston Consulting Group estimates, the autonomous car market will be worth $42 billion by 2025 and $77 billion by 2035.

The recent launch is seen as NVIDIA’s determined focus on remaining ahead of its rivals – Intel Corporation INTC and Qualcomm Inc. QCOM – in the driverless car technology space. The competition in the industry has already heated up with Intel’s recent deal to acquire Mobileye N.V.MBLY for $15.3 billion.

Bottom Line

NVIDIA continues to be the world’s biggest graphic processing hardware provider for PCs since the past several decades. The company’s efforts toward autonomous vehicle and the AI segment shows that it intends to be the largest player in the self-driving and machine learning arena too. Furthermore, by expanding business avenues, the company will be able to reduce dependency on the PC industry, which is currently declining.

Given the accelerated momentum in gaming, datacenter and automotive technology, we believe that this Zacks Rank #1 (Strong Buy) stock with a long-term EPS growth estimate of 10.3% will continue to rally. You can see  the complete list of today’s Zacks #1 Rank stocks here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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