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Nvidia Corp. is still waiting to make big bucks from self-driving cars, but Chief Executive Jensen Huang said Thursday that it is not being held back by a pause in self-driving tests or Tesla Inc.’s slow production ramp for the Model 3.
In a short interview Thursday with MarketWatch after the chip maker released strong earnings results, Huang said that a recent pause in self-driving tests on public roads did not impact Nvidia’s automotive business, and that cars should be back out in public “pretty soon.” He also declined to join Tesla Chief Executive Elon Musk in blaming the media for any delays.
Nvidia reported first-quarter earnings that were better than Wall Street had expected, but its shares slipped almost 3% in after-hours trading, falling back from a record high close after a big run-up in recent weeks. Nvidia stock has again soared this year, up 34% vs. a 1.9% gain in the S&P 500 as investors have focused on the big resurgence in its gaming business and its server chips designed for artificial intelligence applications.
Nvidia’s automotive business was again a laggard when compared with its data center and gaming businesses, which grew 71% and 68% respectively. Automotive grew 4% to $145 million, as it shifts from an infotainment focus to autonomous vehicle development, where its chips are being used by auto makers testing self driving technologies. Last quarter, it showed a sequential decline, and grew less than 15% for the full year, falling below expectations for the second quarter in a row. Auto this quarter was slightly better than consensus estimates of $137.2 million.
In March, Nvidia announced a halt in its self-driving road test, after an Uber Technologies test car killed a pedestrian in a collision. The news overshadowed its annual developer conference, causing its stock to fall, even as Huang told analysts and reporters at the conference that the halt in testing was strictly cautionary, in case the investigations into the pedestrian death show an issue beyond Uber.
Full earnings recap: Nvidia’s stock eases back from record high following big earnings beat
Huang on Thursday said that Nvidia saw no financial effects from the testing halt and said the company is going to resume public road testing soon now that Uber has released its findings from the collision in Arizona.
“We are currently only testing in private roads, private tracks, and in our simulators,” Huang told MarketWatch in a brief interview Thursday afternoon. “We took a pause so we could make sure we learned everything we could from the recent incident and I think [Uber’s] public statements are pretty clear, so we’ve taken a pause and we’ll resume testing here pretty soon.”
When asked about Tesla CEO Elon Musk’s recent comments in a bizarre and unhinged earnings conference call about media coverage of autonomous vehicles collisions, Huang took a much more measured approach than the tyrant billionaire.
“All of the coverage is the reason why we have to invest in the future of autonomous driving,” Huang said when asked specifically if he agreed with Musk’s attacks on the media coverage. “I think its very clear that accidents happen on the road and the best way for us to improve safety on the road and reduce the number of accidents is through automation. These cars are going to have sensory systems that are superior to any human, have software that is always alert, and it will drive more safely than any human over time, so we just have to get there as fast as we can.”
The continued strong gains for Nvidia’s gaming and server business have been priced into the stock at this point, and then some, so the big potential driver for Nvidia is its automotive business. The smaller gains so far suggest that, for all the projections that Huang and others are making, self-driving may be farther off than expected.
Huang told investors that he believes that every vehicle will be autonomous one day. But for now, investors must stay focused on gaming, data centers and cryptocurrency, and wait for a bonus to come eventually with the automotive business.