We recently published a list of 10 Best Automation Stocks to Buy Now. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other automation stocks.
2023 was the year of generative AI, mainly because of the widespread adoption of ChatGPT and the resulting response that followed. Now, 2024 is the year in which companies have truly started using this ever-evolving technology. McKinsey revealed that AI supported the companies in both aspects: cost decreases and revenue jumps.
Automation Technologies- Key Trends
In 2024, the integration of automation technologies continues to revolutionize every aspect of supply chain management. This led to unprecedented levels of efficiency and agility. The global integrated automated supply chain is expected to reach US$25.6 billion by 2033, from US$13.4 billion in 2023, according to industry data by Market.us.
From removing warehousing bottlenecks to inventory management and demand forecasting, supply chain automation reshaped traditional practices and redefined the dynamics of the logistics industry. In inventory tracking, advanced warehouse management systems, which are powered by AI and ML algorithms, focus on optimizing inventory placement, route planning, resource allocation, etc.
Inventory tracking and management are being revolutionized through the usage of automation solutions, such as RFID tagging, barcode scanning, and computer vision. Real-time tracking technologies are offering granular visibility in inventory movements. This allows businesses to monitor stock levels, spot discrepancies, and manage understocking/overstocking. Manufacturers are now getting inclined towards smart factories.
Smart factories reflect and demonstrate Industry 4.0 principles. They tend to leverage 5G, IoT, AI, and other advanced technologies. Experts believe that smart factories allow predictive maintenance and decision-making.
Adoption of Advanced Automation
A new theme is emerging in the field of automation, which is automated decision-making. Its adoption rapidly expanded beyond traditional sectors such as manufacturing and logistics. Demand for decision intelligence stems from data-driven and well-informed decision-making requirements which enhances corporate competitiveness and efficiency.
Automated decision-making is now being accepted by critical domains including healthcare and finance. In healthcare, automation supplements the clinical decision-making processes, improves patient-care delivery, and manages resource allocation. It involves leveraging AI and ML algorithms to assess patient data, medical images, and genomic sequences, and customize patient care.
Likewise, in finance, automated systems continue to reshape top-notch operations like risk assessment, fraud detection, and investment management. AI algorithms assess large datasets of financial transactions and market trends to optimize investment strategies. In 2024, the software development industry is all set to embark on a remarkable transformation with cutting-edge innovations.
Quantum Computing and Robotics
The latest technologies in software that are expected to reshape the landscape include quantum computing, virtual reality (VR), augmented reality (AR), big data, data analytics, 5G technology, robotics, etc.
Quantum computing continues to rapidly advance, evolve, and reshape scientific and industrial landscapes. Unlike classical computers—which use bits as the smallest information unit—quantum computers make use of qubits. These exploit quantum mechanics principles to perform complex and difficult calculations. For example, at the time of drug discovery, quantum algorithms simulate molecular interactions in a more accurate and refined way as compared to traditional methods. The integration of quantum computing with AI is another critical emerging trend.
The unprecedented advancements in robotics and AI are expected to bring revolutionary positive transformations. More and more sectors continue to understand the benefits of adopting robotics and AI. Globally, the robotics market should achieve healthy revenue growth, with a projected value of US$38.24 billion this year. The strongest segment in the robotics market is expected to be service robotics, which should lead in market volume. Service robotics find its application in sectors, like Healthcare, Medical, Military and Defense, Logistics, etc. while industrial robots are used in Automotive, Electronics, Food & Beverage, etc.
The trends driving the robotics market are supported by developments in emerging technologies. These include 5G, AI, Edge Computing, IIoT, cloud, open-source, etc. Since AI in robotics continues to evolve, more and more industries are exploiting the latest technologies. Therefore, manufacturers are making data-driven decisions. Some industries use self-learning robots to execute work processes.
Smart factories are using AI-enabled robotics to execute smarter, reliable, and efficient processes. They help in production optimization. AI-powered robotic technologies, which include computer vision and tactile sensing, are utilized to help automate certain tasks. For example, reinforcement learning is used for better industrial assembly. The adoption of robotics, smart automation, and high-tech manufacturing will help workers with manual labor and reduce repetitive tasks.
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A close-up of a colorful high-end graphics card being plugged in to a gaming computer.
NVIDIA Corporation (NASDAQ:NVDA)
Average Upside Potential: 33.65%
NVIDIA Corporation (NASDAQ:NVDA) is the top designer of discrete graphics processing units that enhance the experience on computing platforms.
Recently, NVIDIA Corporation (NASDAQ:NVDA) stated that leaders in robot development continue to adopt the NVIDIA Isaac™ robotics platform. This platform finds its application in research, development, and production of the next generation of Al-enabled autonomous machines and robots. BYD Electronics, Siemens, Teradyne Robotics, and Intrinsic, which is an Alphabet Company, are using the NVIDIA Isaac Robotics Platform for autonomous robot arms, humanoids, and mobile robots.
In another development, Rockwell Automation, Inc. (NYSE:ROK) plans to use NVIDIA Corporation (NASDAQ:NVDA)’s artificial intelligence software in autonomous mobile robots. Rockwell Automation, Inc. (NYSE:ROK) will integrate NVIDIA Corporation (NASDAQ:NVDA)’s Al robot development platform, dubbed Isaac, in its Otto autonomous mobile robots. This is meant for manufacturing facilities.
Shares of NVIDIA Corporation (NASDAQ:NVDA) saw a decline of over ~18% over the past 1 month. Much of this decline came after reports emerged claiming that the Biden administration might put further restrictions on the exports of semiconductor equipment to Chinese markets. Apart from this, uncertain macroeconomic news (Bank of Japan increasing interest rates, disappointing employment numbers for July, etc.) weighed over broader market sentiments, pressuring NVIDIA Corporation (NASDAQ:NVDA)’s stock. There was also news that the company’s launch of chips, which are based on new Blackwell architecture, might get delayed by ~3 months due to design flaws.
Wall Street analysts believe that this short-term news should not shake the long-term view of the company’s performance. The Biden administration has not put any sort of restrictions up until now.
NVIDIA Corporation (NASDAQ: NVDA) recently announced that it plans to ramp up the production of Blackwell chips in 2H 2024. Experts believe that the company’s current-generation Hopper chips should still sell strongly by 2024 end. By that time, Blackwell chips can become a strong contributor to its sales.
Analysts at Argus upped their target price on the company’s shares from $110.00 to $150.00. They gave a “Buy” rating on 11th June. As per Insider Monkey’s 1Q 2024 data, 186 hedge funds had stakes in NVIDIA Corporation (NASDAQ:NVDA).
Patient Capital Management released its second quarter 2024 investor letter and mentioned NVIDIA Corporation (NASDAQ: NVDA). Here is what the firm said:
“NVIDIA Corporation (NASDAQ:NVDA) continued to lead both the market and the portfolio, remaining a top performer in the period gaining 36.7%. Nvidia is the market leader in designing and selling Graphics Processing Units (GPU), which has recently benefited from the insatiable demand of artificial intelligence (AI) models. The company currently captures 92% market share of data center GPUs and grew revenue, earnings and free cash flow (“FCF”) an astounding 126%, 392%, and 610%, respectively, over the last year. While we expect competition to increase, we think NVDA can continue to maintain top market share. While many are concerned with backlog times shortening, we think the rollout of the B100, which promises 2.5x better performance for only 25% more cost, later this year will create more shortages. With leading edge technology, an increasing innovation cycle and strong cash generation, the company is well positioned for the increased adoption of artificial intelligence (AI).”
Overall, NVDA ranks 5th on our list of best automation stocks to buy. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.