NVIDIA's Self-Driving AI Solutions Find A Taker In Chery

NVIDIA Corporation (NASDAQ:NVDA) recently announced that Chery, a Chinese car manufacturer, would be using its self-driving solution that the company is developing in collaboration with Baidu Inc. (NASDAQ:BIDU) and German auto supplier, ZF Friedrichshafen AG.

Notably, the company has partnered with Baidu and ZF Friedrichshafen to build a “production-ready AI autonomous vehicle platform” specially designed for the Chinese market. The partnership will lead to the integration of NVIDIA DRIVE Xavier platform and ZF’s ProAI car computer into Baidu’s Apollo Pilot, which according to the company, is “an autonomous driving product targeted for mass production.”

Chery will be the first Chinese automobile company to adopt this technology and intends to integrate the aforementioned AI platform in Level 3 automobiles, per Techcrunch. The company is well known for its lower-priced tech loaded vehicles. Though incorporation of Level 3 autonomous features poses challenges, a proper combination of these technologies might be beneficial for the company.

The deal was announced at the North American International Auto Show, following the Customer Electronics Show (CES) 2018, where NVIDIA stole the limelight with its initiatives in driverless vehicles and powering artificial intelligence (AI) technology to build autonomous vehicles.

In the last few years, NVIDIA has been trying to strengthen its capabilities in the space through several partnerships. We believe, this year will not be an exception as reflected from the collaborations it announced during the CES event.

Apart from making partnerships with Baidu and ZF Friedrichshafen, the company announced a partnership with Aurora to build a “Level 4 and Level 5 self-driving hardware platform”, which will integrate its Xavier processor.

These efforts have been benefiting NVIDIA as more and more companies have agreed to use its AI technologies for the development of autonomous vehicles. The recent additions to the list are Uber Technologies Inc. and Volkswagen (DE:VOWG_p) AG as disclosed by the company at the CES event. Notably, the company is working with over 320 companies across the globe on automotive applications.

The immense growth opportunity available in the space justifies NVIDIA’s efforts.

Per BI intelligence, 10 million self-driving cars will hit the roads by 2020. Statista states that the market for fully autonomous vehicles will grow to almost $6 billion, while partially autonomous vehicles market will reach $36 billion by 2025. Boston Consulting Group anticipates the autonomous car market to be worth $42 billion by 2025 and $77 billion by 2035.

Thus, the estimates provided by these firms make us optimistic on NVIDIA’s prospects in the space. The company has already outpaced competitors such as Intel (NASDAQ:INTC) and Advanced Micro Devices (NASDAQ:AMD) .

We believe that with continued focus on advanced AI technologies for self-diving cars, the company is well poised to gain from the growth opportunity of the market.

Notably, NVIDIA stock has gained 113.4% the past year, substantially outperforming the 53.9% rally of the industry it belongs to.

NVIDIA carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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