Tuesday, November 15, 2022
In its constant quest to separate investors from their money, Wall Street is currently beating the drums about a hot new tech investment.
This one is a software company in the autonomous-vehicle sector. It’s called Mobileye Global Inc. (MBLY).
Irony abounds. You see, I’ve excitedly tracked Mobileye’s progress for years. Furthermore, I’m a big advocate for driverless and semi-autonomous cars, and I even own such a car.
You might think I’d be rushing to invest in Mobileye’s recent initial public offering (IPO). But the fact is, I’m steering clear — and I’m advising you to do the same.
Let me explain why. Then I’ll reveal what I believe to be a vastly-superior investment opportunity.
Mobileye, which went public a few weeks ago, is an intriguing company.
It’s a leading maker of driver-assistance and vehicle-automation systems for cars. Its cameras, chips, and software are used in cars made by BMW, General Motors, Ford, and Toyota.
Mobileye also pioneered adding “smart” chips to ordinary cameras, enabling car makers to add advanced-automation features without having to develop their own Artificial-Intelligence platform.
Chances are, if you’ve ever used lane-keeping assistance, blind-spot monitors, or self-parking systems, you’ve used Mobileye’s technology.
Founded in Israel in 1999, Mobileye was the country’s largest IPO when it went public on the New York Stock Exchange in 2014. Three years later, the company was acquired by Intel, where it remained a subsidiary until a few weeks ago, when Intel spun it off onto the Nasdaq.
Now it’s publicly-traded again.
But as I mentioned, I’m not rushing to invest in it quite yet…
IPOs are the lifeblood of Silicon Valley. They constantly make headlines.
But typically, the only people who make money at the IPO are the insiders.
Insiders sell to cash-in their profits, and this drives the stock price down.
This is why I recommend waiting before scooping up shares. Six months from now, I might invest in Mobileye.
But in the meantime, I’m focusing on a different autonomous-vehicle-technology-company…
One that’s tripled the overall market’s returns over the past five years…
It’s called Nvidia Inc. (NVDA). This company is best known for its computer-graphics chips. But it’s also a giant in the autonomous-car sector.
Nvidia has more than 2,000 employees working on autonomous-vehicle technology. That’s more employees than many self-driving companies have in total.
The company has created a DRIVE supercomputer-on-a-chip platform. Essentially, this allows cars to easily process signals from car sensors, cameras, and radar systems.
Furthermore, DRIVE chips come with all the features car makers desire — everything from voice control to collision warning to lane-departure warnings.
Nvidia’s car chips can even incorporate this information inside a three-dimensional model of the vehicle’s surroundings. This opens the possibility of heads-up displays that show drivers any potential hazards.
Importantly, any car equipped with Nvidia’s DRIVE chip can easily meet what the auto industry refers to as advanced-driver-assistance systems, or ADAS.
While that’s not the same as full self-driving technology, ADAS encompasses most conveniences modern drivers look for, including multiple safety features.
Speaking of safety, Nvidia’s chip provides simulations for car makers so their systems can be tested. The latest chips even allow for software updates to happen on-the-fly, without having to reboot the entire vehicle.
Nearly fifty car and truck makers work with Nvidia’s DRIVE chips, including Mercedes, Jaguar, Land Rover, Volvo, and Chinese brand XPeng.
But the chip can’t do much without software, an area where carmakers have little expertise. That’s why Nvidia provides a fully-modular software stack to its DRIVE partners. This enables carmakers to tailor their DRIVE systems to their needs, and incorporate new sensors and systems.
Right now is a good time to get in on Nvidia.
Earnings have taken a slight hit due to the semiconductor-chip shortage. But over the last three years, per-share profits have grown by an average of sixty-seven percent.
Even trimming that in half to be conservative, we’d still see earnings double in a little more than two years.
And as you learned, Nvidia’s returns have trounced the overall market recently. Its stock has climbed 172% over the past five years, compared to around forty-five percent for the S&P 500 during that time — more than three times better.
While we wait and see how Mobileye performs on the market, let’s not wait to invest in Nvidia. The potential here is too good to pass up.
What’s the best way to get positioned in this stock? For details, check out our “Trade of the Week” below.
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Cheers and Good Investing,
Chief Investment Officer
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