While chip stock Nvidia (NVDA) is proving to be one of the biggest players around in data centers, cryptocurrency, and artificial intelligence (AI), there is one point that some might not have seen coming: self-driving cars. But the news proved little help for share prices as Nvidia shares dropped nearly 4% in Thursday afternoon’s trading.
One of the high points from Nvidia’s earnings report was its automotive and robotics segment, where the figures better than doubled, rising 103% to reach $570 million by itself. That represented a record for Nvidia, and there is a real potential that its “driver-assist” operations could be Nvidia’s next billion-dollar operation.
Eventually, projects Nvidia, every one of the one billion cars on the road today will be self-driving, and that in turn—if it actually comes to pass—will represent a huge potential market for self-driving vehicle technology. Of course, Nvidia is not alone in this market, so it will be splitting up that market share. But given Nvidia’s past trajectory, it may be able to seize a majority of the market thanks to its reputation alone.
But Are Drivers Interested?
There is one major problem with Nvidia’s projections: not every driver really wants an artificial intelligence behind the wheel. A survey sponsored by the American Automobile Association (AAA) revealed that drivers have “serious unease” about self-driving cars, to the point that 61% of respondents in the survey said they “do not trust self-driving vehicles.”
The study itself is interesting in nature; only 1,095 people were surveyed, which makes the results a bit questionable. Further, the survey did not distinguish between completely robotic cars and cars like Tesla’s (TSLA) that require a certain level of human involvement. One wonders if those involved in this study also distrust cruise control.
Is NVDA a Good Stock to Buy Right Now?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 36 Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 62.92% rally in its share price over the past year, the average NVDA price target of $178.62 per share implies 40.71% upside potential.
