The majority of Nvidia’s revenue comes from its data center business, thanks to booming sales of its industry-leading artificial intelligence (AI) chips.
Nvidia CEO Jensen Huang thinks autonomous vehicles could be the next trillion-dollar opportunity for the company.
According to a forecast from Huang earlier this year, Nvidia’s automotive revenue could triple during fiscal 2026.
Nvidia(Nasdaq: NVDA) generated more than $44 billion in revenue during its fiscal 2026 first quarter (which ended April 27), with $39.1 billion of that total coming from its data center business alone. The company sells the most powerful graphics processing units (GPUs) in the world for data centers, and they are the chips every artificial intelligence (AI) developer wants to use.
Nvidia CEO Jensen Huang thinks AI data center spending will top $1 trillion per year by 2028, but he’s eyeing another trillion-dollar opportunity: autonomous vehicles. The company’s automotive segment is often overlooked by investors because it contributes a minuscule amount of revenue compared to the data center segment, but that could soon change if Huang’s recent forecasts come to fruition.
Image source: Nvidia.
Besides sensors and other advanced hardware components, a self-driving car requires AI software which is trained on millions of hours of real-world data to ensure it’s equipped to safely deal with every possible scenario when sharing the road with other vehicles and pedestrians. Building a roadworthy autonomous vehicle isn’t easy, and only a small handful of companies are having success.
Alphabet‘s Waymo is completing more than 250,000 paid autonomous ride-hailing trips every week in San Francisco, Los Angeles, Phoenix, and Austin, and Tesla hopes to have its autonomous robotaxi on the road in California and Texas this year. Both of these companies have invested billions of dollars in developing proprietary autonomous hardware and software, but many car manufacturers don’t have the expertise or the financial resources to compete.
That’s where Nvidia’s Drive platform comes in. It’s a complete hardware and software solution that includes the powerful Thor chip, which processes data from the car’s sensors to make lightning quick decisions on the road. It’s gaining serious traction, with top brands like Mercedes-Benz, Toyota, General Motors, Rivianand Volvo choosing to adopt it.
Back in January, Jensen Huang said self-driving cars could be the first multitrillion-dollar segment of the AI powered robotics industry. Then, in a more recent interview with CNBC in June, he said this could be the decade of autonomous vehicles (and autonomous machines in general), which suggests these technologies might be on the cusp of going mainstream.
As I mentioned at the top, the data center business is the dominant contributor to Nvidia’s revenue. During the first quarter of 2026, the automotive segment generated $567 million in revenue, accounting for just 1.3% of the company’s total.
However, earlier this year Jensen Huang said Nvidia’s automotive revenue could come in at $5 billion for the whole of fiscal 2026, which would be a whopping 194% increase from its fiscal 2025 result of $1.7 billion. But that’s not all, because car manufacturers are starting to invest heavily in Nvidia’s other products to customize and refine their self-driving offering in order to stand out from the competition.
Huang says many car makers are buying Nvidia’s DGX data center systems fitted with the latest Blackwell GPUs, so they have enough computing power to continue improving their self-driving AI models. Plus, they are using Nvidia’s multimodal foundation model called Cosmos, which is pre-trained on more than 20 million hours of video, so it already has a comprehensive understanding of the physical world.
Cosmos can be used to run millions of simulations using synthetic data, which can be used to further train self-driving models. In other words, it reduces the need to collect data from real-world driving, which can be a cumbersome and time consuming process. The new Cosmos Predict-2 models offer deeper functionality and faster throughput to deliver even better results.
According to Wall Street’s consensus estimate (provided by Yahoo! Finance), Nvidia could deliver $199 billion in total revenue during fiscal 2026. Therefore, even if its automotive revenue triples to $5 billion, it would still be a very small part of the overall business. Investors who buy Nvidia stock today are still doing so for the strength of its data center segment.
Nevertheless, this could be a great entry point for investors who believe autonomous driving will eventually be a multitrillion-dollar opportunity over the long term as Huang expects, because Nvidia stock is quite attractive at the current level. It’s trading at a price-to-earnings (P/E) ratio of 46.4, which is a 23% discount to its 10-year average of 60.
Plus, Wall Street thinks Nvidia’s earnings per share could grow to $4.29 during fiscal 2026, placing its stock at a forward P/E ratio of 33.5:
That means if Wall Street’s forecast proves to be accurate, Nvidia stock will have to climb 38% over the next 12 months or so just to maintain its current P/E ratio, and it would have to soar by 79% to trade in line with its 10-year average P/E ratio of 60. But investors might want to focus on the longer term considering autonomous driving has the potential to become yet another trillion-dollar opportunity for the company.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Nvidia, and Tesla. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.
