Nvidia And The Self-Driving Auto: Competition Is Good For Investors

“At CES this year, Audi and Mercedes Benz announced self driving car development programs based on NVIDIA Corporation NVDA technology,” reported Jefferies’ Mark Lipacis in a note.

Lipacis maintains a Buy rating on NVIDIA, while raising the price target from $110 to $125.

Heating Competition

“We think the Audi announcements signal heated competition for self-driving cars, which translates to increased confidence in our three-year $6 EPS earnings power for NVDA,” the analyst mentioned.

At the CES, Audi announced that it had entered into an expanded partnership with Nvidia for the development of a Level 4 capable self-driving car, based on the latter’s technology. The car is expected to be ready for market launch by 2020.

Mercedes Benz also announced its self-driving car program, also based on Nvidia ’s technology, which was expected to be ready by year-end 2017.

Good For NVIDIA

“The increased pace of self-driving car announcements suggests that the competition between Auto-OEMs to launch self-driving cars is heating up, and we expect more announcements between NVDA and Auto OEMs in 2017,” Lipacis stated.

Since NVIDIA is the only company that offers a hardware and software neural-network platform for self-driving cars, the analyst views the increased competition as a positive for the company, and expressed increased confidence in the three-year EPS estimate of $6.

At last check, shares of Nvidia were up 1.27 percent at $104.41.