Netflix is a wonderful company. But I’ve never understood why it represents the ‘N’ in the list of FAANG technology stocks (Facebook, Apple, Amazon, Netflix, Google). A better substitute is Nvidia - the company that develops gaming technology, GPUs (graphics processing unit), SoCs (systems-on-a-chip), supercomputers, artificial intelligence, cryptocurrency hardware for mining, CPUs (central processing unit), and is a key supplier to automakers developing smart EVs and autonomous vehicles.
For me, Nvidia represents an important investment in autonomous vehicle technology. I originally acquired the stock in August 2017 because I sensed the company’s technology would become critical in a world of self-driving vehicles. The stock is up almost 300% since then and has risen 50% during the past 12 months. The company’s founder and CEO, Jensen Huang, is another major reason for my Nvidia conviction. Like Tim Cook at Apple, Elon Musk at Tesla, Satya Nadella at Microsoft, and Mary Barra at GM, Huang is the driving force behind Nvidia’s success. Leadership matters. And there is no better technology CEO than Jensen Huang.
“[For the $10 trillion transportation industry], AV [autonomous vehicle] is the most intense machine learning and robotics challenge…We’re building an AV…from the AV chips and computers sensor architecture, data processing, mapping, developing the driving software, creating the simulator and digital twin, fleet command operations, to road testing.” - Jensen Huang, GTC 2021 Keynote Speech, April 13, 2021.
Who are Nvidia’s important customers? Tesla is a long-term customer for Nvidia. Although Elon Musk recently began using Tesla’s own Full Self-Driving computer instead of Nvidia hardware, the company’s data center, which houses the training for its artificial intelligence, still is based on Nvidia. Mercedes is building an entire vehicle portfolio around a software architecture based on an Nvidia supercomputer. Chinese automakers, NIO, Li Auto and Xpeng also are Nvidia customers. Similarly, Toyota, Hyundai, VW, Audi, and Volvo use Nvidia technology. In the trucking industry, Nvidia is working with giant truck-maker, PACCAR (DAF, Kenworth and Peterbilt). The TuSimple / Navistar autonomous driving partnership uses Nvidia technology as well. And Nvidia technology is being used by important Tier 1 automotive suppliers like Bosch, Continental, Veoneer, and ZF.
“There are too many components in cars, with various supply chains and it is super complicated. Cars have to be re-architected, with a few centralized components, perhaps four components instead of thousands.” - Jenseng Huang, April 13, 2021
The global autonomous transportation business will become a $10 trillion industry according to several experts. The utilization of Nvidia technology will continue to be key for many companies developing self-driving vehicles. And for Nvidia stock, there’s still a lot of room for additional appreciation given the company’s portfolio of growing profitable businesses along with its increasing capability in autonomous vehicle technology.
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Disclaimer
TaaSMaster, LLC is not a registered investment advisor or broker/dealer. All investment opinions expressed by TaaSMaster, LLC are from personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors may occur.