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Do you like Rivian Automotive? This hot tech stock might be just right for you

Eelectric truck company Rivien Automobile (NASDAQ: RIVN) has received a lot of love on Wall Street lately as analysts seem convinced of the ability to sell a vehicle truck starting next year, thanks to orders from Amazon and the potential boom in demand for electric trucks in the United States

Bank of America, for example, has a price target of $ 170 on Rivian stock, which implies an increase of almost 50% from its price at the time of this writing. This is impressive considering that Rivian is still largely a pre-income company; she just sold a dozen of her trucks. It was the enthusiasm for electric vehicles (EVs) that made Rivian stock a popular investment. But there’s another way you can participate in Rivian’s growth through a company that set the stock market on fire this year – Ambarella (NASDAQ: AMBA).

AMBA given by YCharts

Rivian could give Ambarella a big boost

Ambarella management celebrated the month of December for the company earnings conference call that Rivian’s R1T truck is equipped with multiple cameras, radars and sensors. According to Fermi Wang, CEO of Ambarella:

The R1T Driver + includes 11 cameras, five radars and 12 ultrasonic sensors to provide true hands-free driving assistance as well as a full set of safety features.

The R1T’s Driver + system uses multiple CV2AQ CVflow automotive SoCs for its AI vision processing. In addition, the R1T also uses Ambarella’s CV22AQ CVflow automotive SoC for its panoramic camera processing and equipment guard security system. Rivian’s design highlights the use of Ambarella’s AI vision SoCs in centralized automotive computing applications. These applications represent a major new opportunity for Ambarella to move forward.

Let’s analyze this. Ambarella supplies three types of chips to Rivian for the R1T electric truck. The EV uses multiple CV2AQ chips to handle video perception. Meanwhile, the CV22AQ system on a chip (SoC) handles the panoramic view and security camera functions of the Rivian R1T, while Ambarella’s B8 chip is used to transport data from the image sensors to the first two. types of computer vision (CV) fried.

KeyBanc Capital Markets analyst John Vinh estimates that Ambarella provides tokens worth at least $ 100 to every Rivian R1T truck. This could be a big deal for the chipmaker in the long run, as Rivian has an order book of just over 55,000 vehicles that it expects to fill by 2023. In addition, Rivian also has an order. Amazon to build 100,000 electric delivery vans, however Morgan stanley believes that its orders from the e-commerce giant could increase to 300,000 in the next five years.

As such, Rivian could open up a great revenue opportunity for Ambarella in the long run, especially as the start-up plans to increase its annual production to at least one million units by the end of the year. decade.

Person reading a book inside an autonomous car.

Image source: Getty Images

More reasons to buy Ambarella

Rivian is just one of the driving forces behind Ambarella in the automotive camera market. The chipmaker has built a solid portfolio of companies that are expected to use its chips to power their vehicles’ cameras. Ambarella has announced several design wins this year for its automotive camera chips with Yandex, KeepTruckin, Autocruis and Momenta, among others, over the past few months.

Arrival, another electric vehicle company, had selected Ambarella’s CV chips to power the autonomous driving function and advanced driver assistance systems (ADAS) in its buses and vans in June this year. In total, Ambarella currently has a pipeline of design gains worth $ 700 million in the automotive sector, up from $ 400 million last year.

Given that the company generated $ 303 million in revenue in the past year, the automotive design earnings pipeline alone indicates tremendous revenue growth. Add Ambarella’s perspectives to the security cameras market, and it’s easy to see why the company is expected to achieve nearly 87% annual profit growth over the next half-decade.

Arguably one of Rivian’s main suppliers is designed for long-term growth through the increasing deployment of cameras in vehicles, which makes Ambarella a leader. growth stocks buy for the long term.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of the board of directors of The Motley Fool. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Dur Chauhan has no position in the mentioned stocks. The Motley Fool owns and recommends Amazon. The Motley Fool recommends the following options: January 2022 long calls at $ 1,920 on Amazon and January 2022 short calls at $ 1,940 on Amazon. The Motley Fool has a disclosure policy.

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