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NVIDIA’s DRIVE PX2 Drove Its Automotive Revenue in Fiscal 1Q17

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Automotive continues to benefit from the emergence of self-driving cars

In the previous part of the series, we saw that NVIDIA’s (NVDA) data center segment reported strong growth in fiscal 1Q17 as more and more companies adopted deep learning. The data center segment surpassed the growth rate of the company’s fastest-growing segment, automotive.

In fiscal 1Q17, NVIDIA’s automotive revenue rose 47% YoY (year-over-year) to $113 million, accounting for 8.7% of the company’s revenue. The company has been witnessing increasing interest from automakers in its Tegra platforms, DRIVE PX 2 and DRIV CX. Volvo is believed to be the first to adopt the PX2 platform. The company plans to use the platform in 100 autonomous sports utility vehicles by 2017.

NVIDIA supports self-driving cars

NVIDIA is working with more than 50 automakers, including Ford (F) and Fiat Chrysler (FCAU), on their self-driving car projects. Lux Research expects self-driving cars to be an $87 billion market by 2030, with software getting a big bite. More than 80 companies are using NVIDIA’s open architecture of Drive PX to develop their own software.

While self-driving will provide a strong opportunity for NVIDIA in the long term, single features of self-driving cars can provide it opportunity in the near term. The forward camera detection feature of advanced driver assistance systems is becoming increasingly common in almost all cars.

Even Intel (INTC) and Texas Instruments (TXN) are eyeing the lucrative market of self-driving cars to gain market share.

After looking at NVIDIA’s high-growth segments, let’s look at the company’s slow-growing professional visualization and OEM (other equipment manufacturers) and IP (intellectual property) segments in the next part of the series.

The iShares Russell 1000 Value ETF (IWD) invests in large-capitalization US equities across various sectors, including technology. It has 0.19% holdings in NVDA and 0.52% in Ford.

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