Nvidia is poised to benefit as vehicles go electric and autonomous
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Nvidia (NASDAQ:NVDA) shares may have sold off this week after it posted earnings and guidance that weren't up to investors' expectations, likely due to margin concerns, but the chip company will be a big beneficiary as eventually, every vehicle on the road becomes electric and has some autonomous capabilities. 
Cowen analyst Matthew Ramsay, who rates Nvidia outperform with a $350 price target, notes the company's transition from a PC-leveraged GPU supplier to a "diverse parallel computing company" has benefited because all of its end markets -- gaming, datacenter, professional visualization and automotive - are all "infused by AI-based computing."
"We view NVIDIA as the premier AI-driven growth story in semis and possibly the tech industry," Ramsay wrote in a note to clients, adding that automotive revenue is "expected to accelerate" after the company highlighted the recently signed deal with Jaguar Land Rover.
Ramsay added that the total addressable market for Nvidia in the autonomous driving market could reach $60 billion by 2035, many times the $566 million in auto-related revenue Nvidia generated in its most recent fiscal year.
Susquehanna analyst Christopher Rolland, who rates Nvidia positive with a $360 price target, noted that the automotive revenue of $125 million in its most recently announced quarter were "disappointing."
However, Nvidia's management, led by Chief Executive Jensen Huang, are positive that represents a bottom, citing long-term supply obligations of $9 billion, touting the company's Orin AI-powered system-on-a-chip, which can deliver up to 254 trillion operations per second. 
"As mentioned, Orin ramping into autonomous vehicles is brand new," Huang explained on the company's earnings call. "This is the inflection point of us growing into autonomous vehicles. This is going to be a very large business for us going forward."
Huang also mentioned that the company's partnerships with both Jaguar Land Rover and Mercedes Benz "will scale with the size of their NVIDIA-powered fleet, which, combined, can exceed 10 million cars over a decade."
For now, Nvidia is still largely dominated by gaming and data centers, with both segments accounting for $6.68 billion of the $7.64 billion in revenue Nvidia generated last quarter. However, Raymond James analyst Chris Caso, who rates shares outperform, noted that auto will be "significant" when it comes to contributing revenue in the future.
While it's unclear exactly when Nvidia will see an inflection point in its automotive business, Cowen's Ramsay added that not only has it created an impressive and diverse list of partners for its hardware and software ecosystem, it is the leader in the autonomous space long term.