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Pro Analysis

Buy Nvidia on new ‘self-driving’ chip deal with Tesla, top analyst says

A Nvidia Drive PX 2 computer for autonomous vehicles.
Steve Marcus | Reuters
A Nvidia Drive PX 2 computer for autonomous vehicles.

Investors should purchase Nvidia shares as it won a key contract with Tesla for its new "self-driving" car feature, according to Mizuho Securities, which reiterated its buy rating on the chipmaker.

Tesla announced Wednesday that vehicles now in production and future Model 3 cars will have the hardware for full self-driving capability.

"Tesla's Elon Musk announcing a future road map, noting Tesla car's going forward will use NVDA's Titan GPU away from the MBLY," analyst Vijay Rakesh wrote in a note to clients Thursday.

"This underlines positive trend for NVDA's GPU implementation ... Tesla last night announced move into Level4/5 (L4/L5) capability on its cars further accelerating the ADAS [advanced driver-assist systems] road map for the automotive ecosystem."

Rakesh's picks have a 27 percent one-year average return and a 76 percent success rate for a profit, according to analyst ranking service TipRanks. That places him in the top 1 percent of all Wall Street analysts covering any industry.