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Entrepreneur
Kurra Bewarse
Username: Entrepreneur

Post Number: 3594
Registered: 05-2011
Posted From: 172.58.168.25

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Posted on Monday, June 14, 2021 - 6:06 am:   

NVIDIA is self-driving itself higher today after announcing its acquisition of DeepMap (713.38 +16.38)

NVIDIA (NVDA +2%) is self-driving itself higher today after announcing its acquisition of DeepMap, which produces detailed and accurate high-fidelity 3D maps. Investors are cheering the acquisition despite a lack of details surrounding the deal. It should be finalized around 3Q21 (Oct).

Nvidia is best known for its gaming chips, but its Automotive segment may be poised to become its next catalyst. Map data is considered the biggest hurdle for self-driving technology as autonomous vehicles (AVs) need to operate with centimeter-level precision. We see the acquisition of DeepMap as another step in the right direction for Nvidia.

Nvidia's Automotive segment has been quiet over the past year, with revenues flat since 1Q20 (Apr). In addition, Automotive only makes up 2.7% of total revenue, a decline from 5% of total revenue in 1Q20. This decline is primarily from Gaming and Data Center revenue growth nearly doubling yr/yr. However, we think that Automotive could represent a sleeping giant for Nvidia, which develops its DRIVE system-on-a-chip (SoC) as an AI SoC that can be used for autonomous driving. We think this could soon have a more profound impact on the company's top line.

Here are reasons why we are bullish on Nvidia's Automotive segment:

Nvidia's automotive design win pipeline exceeds $8 bln through FY27, with global adoption already achieved throughout the transportation industry. Nvidia currently has over 370 DRIVE partners.
Furthermore, its DRIVE platform has yet to reach mass production. Car manufacturers such as Volkswagen, Mercedes-Benz, and Nio have announced their intent to use Nvidia's DRIVE platform for many of their premium vehicles beginning in 2022. Also, the DRIVE platform will be expanded to larger commercial fleets, including robotaxis and semi-trucks.
Nvidia's DRIVE platform can also be used for features other than self-driving, such as safety and AI-enabled infotainment centers, enabling adoption in entry-level cars. For example, Hyundai is deploying Nvidia's DRIVE platform across its entire fleet beginning in late 2021 for its infotainment system.
Overall, building off the technology Nvidia has developed in its GPUs, the company is in a prime position to take full advantage of the shift to autonomous driving. Analysts are expecting about 50% revenue growth for FY22, and given that Nvidia's commentary on its guidance primarily focuses on Gaming and Data Center, much of its Automotive potential may not be getting priced in. Finally, although supply constraints remain a concern, we think that since Nvidia and most auto manufacturers forecast this hurdle to ease by 2H21, it should not affect the mass rollout of DRIVE in auto manufacturers' 2022 model year vehicles.

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