This AI Stock Could Be the Biggest Winner From the Robotaxi Event (Hint: It’s Not Tesla)

After a long wait, Tesla (TSLA -3.70%) is finally ready to pull the curtain back on the robotaxi.

It’s unclear exactly what will happen at the Oct. 10 robotaxi event, but analysts expect Tesla to release an update on its full self-driving technology, which CEO Elon Musk sees as the linchpin in the company’s automotive business.

Some analysts hope that Tesla will finally unveil the actual robotaxi model, which Musk has described as a small autonomous vehicle (AV) that individuals can own and rent out, like an Uber, while they’re not using it, allowing the vehicle to make money for the owner and essentially pay for itself.

Tesla could also unveil its lower-priced Model 2 vehicle, and provide information on production, rollout, and the operating platform for the robotaxi.

The stakes are high with the robotaxi reveal, as Tesla retains a lofty valuation even as the business has essentially flatlined, with unit sales and revenue growth now minimal, while profits have fallen for the last few quarters.

Musk has touted the importance of autonomy for Tesla on multiple occasions, saying on the second-quarter earnings call, “I really just can’t emphasize [enough] the importance of autonomy for the vehicle side and for Optimus (its autonomous robot).”

The Nvidia angle

The robotaxi has the potential to be a juggernaut for Tesla. Musk agreed with Cathie Wood’s estimate of a $5 trillion valuation for Tesla once robotaxis scale up, but there’s another stock that could be a big winner on excitement for autonomous vehicles.

Autonomous vehicles can’t function without massive artificial intelligence (AI) infrastructure, and they’re arguably the most demanding AI project in the works.

These days, Nvidia (NVDA 2.24%) makes a significant percentage of the components that make autonomous vehicles work, which puts the chip stock in the driver’s seat in a potential autonomous vehicle boom. Tesla is using 35,000 Nvidia Hopper GPUs for its full self-driving AI cluster. The cost for those GPUs at current prices is about $1 billion.

Musk has also given praise to Nvidia on several occasions and said how crucial it is for Tesla to get Nvidia GPUs when it wants them. At a recent dinner shared by Musk, Oracle‘s Larry Ellison, and Nvidia CEO Jensen Huang, Musk and Ellison reportedly spent much of the night “begging” Huang for more GPUs.

Making full self-driving work and scaling up its robotaxi operation is a key AI priority for Tesla, so it figures that Musk intends to deploy at least some of those GPUs toward full self-driving.

The autonomous vehicle landscape beyond Tesla

Tesla isn’t the only player in AVs. Alphabet‘s Waymo and General Motors‘ Cruise have already deployed autonomous vehicles on city streets, and nearly every other automaker and several start-ups are working on the technology.

If Tesla is successful with its robotaxi, it’s likely to set off an arms race in AV technology, much like OpenAI did with large language models when it launched ChatGPT, and Nvidia is likely to be a winner in an AV boom, similar to the way it’s been with generative AI.

While its Drive AV platform doesn’t get nearly as much attention as its data center GPUs these days, the technology is used by a number of automakers, including Volvo, Daimler, Hyundai, Nio, and Rivian, making Nvidia a likely winner as the industry grows.

The AV business is still small, as its autonomous and robotics segment brought in just $346 million in the second quarter, compared to $26.3 billion from the data center. However, Nvidia investors should be paying attention to the robotaxi unveil on Thursday, especially since it could include details on Nvidia products being used in the technology.

If investors like what they see, it could set off another bull run in Nvidia stock.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Nvidia, Oracle, Tesla, and Uber Technologies. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.