I've said it before and I will say it again, autonomous driving is perhaps the biggest tech opportunity on the horizon. Anyone who can get a piece of this market is going to do incredibly well and anyone who can dominate it is going to coin money.
Today Intel (INTC) took a step toward dominance with its $15 billion agreement to buy Mobileye (MBLY) , the Israeli manufacturer that is one of the leaders in Advance Driver Assistance Systems. Mobileye currently works with 27 car manufacturers and has already worked with Intel including on a groundbreaking deal announced last year with BMW.
Now Intel's stock got hit today even as the company is using its ample spare cash to make the acquisition, not its stock. Perhaps investors dumped Intel because $15 billion seems like a large price to pay for a company with only $360 million in revenue and 660 employees.
I think that's totally the wrong way to look at it. What matters here is that Intel is challenged for growth, as that last quarter showed, and the best growth it has is in the overall Internet of Things and this acquisition fits right in.
As CEO Brian Krzanich told employees in an email, "Many of you have asked why we think autonomous cars and vehicles are so important to Intel's future. The answer is DATA. Our strategy is to make Intel the driving force of the data revolution across every technology and every industry. We are a DATA company. The businesses we focus on and deliver solutions to, create use and analyze massive amounts of data. "
Krzanich had made this point to me when I spoke to him last month. He said he wanted to change the perception of Intel. "Thirty two billion of our $60 million is the p.c. but as I go through the rest of the decade, by 2002, the data center, the autonomous car all of these other things will be bigger than the p.c. so we have to start shifting people's thinking that we are a data company because that is where we're headed not where we are."
He went on to explain how autonomous cars fit in with the fast-growing cloud business. "Today I talk about the cloud; it's based on people. It's your tweets, it's your e-mails. It's your Facebook posts. The cloud of tomorrow is going to be based on those autonomous cars."
How big is that market? Brian told me "The autonomous cars put out as much data as 3,000 people. One car is 3,000 peoples worth of data. Put a million cars on the road, that's equivalent to half the population of the world in data."
Yep, it's a huge market.
Intel's not alone. Nvidia's (NVDA) got fantastic chips for autonomous driving. NXP Semiconductor (NXPI) , which is being acquired by Qualcomm (QCOM) , has them too. Perhaps most important, Google's got its own chips as part of Waymo, its autonomous driving division that I think is going to turn out to be the biggest winner in the space. Action Alerts PLUS, my charitable trust, which you can follow along if you join the club, owns NXP and Alphabet (GOOGL) , parent of Google and Waymo because we think this market is the biggest out there. You have more than a million fatalities a year from car crashes. You have as many as twenty million people in this country alone who are disabled and can't drive who could with autonomous cars. It is a fantastic opportunity.
So, I know that the market didn't like the deal. But I think that's viewing it way too short term. When you see the new Intel, the one that's a dominant data center business because of this acquisition, you will want to pay much more for the stock than you would now. I say congratulations Brian on taking the big step to get Intel to be viewed as far more than just a personal computer parts company. It was already more than that in many ways, but this will cement the changed legacy.