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NVIDIA (NVDA) Suspends Self-Driving Car Tests, Shares Crash

NVIDIA NVDA shares fell almost 8% to close at $225.52 on Mar 27, after the chip-maker announced that it suspended all self-driving car tests across the globe.

The announcement follows last week’s Uber crash that killed a woman in Arizona. The ride-hailing firm already halted self-driving car tests in all locations, including San Francisco, Pittsburgh, Phoenix and Toronto.

NVIDIA’s decision to halt tests reflects concern about the findings of the ongoing crash investigation. It is widely perceived that the crash resulted from the malfunctioning of either the hardware or the software within Uber’s system.

NVIDIA, being the hardware technology provider to Uber, remains susceptible to the findings of the investigation. Velodyne, which provided Lidar with laser sensing technology, already stated that they were cooperating with the ongoing investigation.

NVIDIA Halts to Slow Down Commercialization

NVIDIA’s decision to halt tests doesn’t bode well for the nascent self-driving car technology. The company is a major supplier of artificial intelligence (AI) chips which present self-driving capability to cars. Notably, NVIDIA is working with over 320 companies, globally, on automotive applications.

Apart from Uber, NVIDIA supports autonomous vehicle projects of Volkswagen and China’s Baidu BIDU through its new augmented reality, driverless car technology, DRIVE AR. The company, in partnership with Aurora, is building a “Level 4 and Level 5 self-driving hardware platform”, which will integrate its Xavier processor.

NVIDIA has returned 110.1% in the past year, significantly outperforming 55.5% rally of the industry. The outperformance can be attributed to its growing dominance in the chips for self-driving cars, data centers and AI.


 

However, a halt on test-run will slow down commercialization process doesn’t bode well for the company’s top-line growth. Automotive revenues in the last quarter were $132 million, reflecting an increase of 3% year over year.

New Simulator to Solve Test Driving Issues?

At the ongoing GPU Technology Conference in San Jose, CA, NVIDIA unveiled Constellation driving simulator that allows companies to test self-driving systems in a virtual environment. Per MarketWatch, early-access partners will get access to the solution in the third-quarter.

Although NVIDIA doesn’t expect the new simulator to fully replace real-world testing of self-driving cars, it is expected to lower the number of trials, significantly.

Moreover, we believe that the new simulator will improve NVIDIA’s competitive position in the self-driving car market space, particularly against chip-makers like Intel INTC and Texas Instruments TXN.

Intel’s acquisition of MobilEye now enables it to offer almost anything related to self-driving vehicles – cameras, in-car networking, sensor-chips, roadway mapping, cloud software, machine learning and data management.

Moreover, in August 2017, the chip-maker announced plans to build 100 “level 4” vehicles to test its self-driving technology. The company has also been a long-time supplier to Alphabet’s Waymo division.

In 2017, Texas Instrument also launched a portfolio of chips that include sensors for driver assist and autonomous driving.

Currently, NVIDIA sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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