Shares of WeRide Inc. (NASDAQ: WRD), a Chinese-based autonomous vehicle technology company, soared on Friday after NVIDIA (NASDAQ: NVDA) disclosed in a regulatory 13F filing that it holds over 1.7 million shares in the company.
This revelation sent WeRide’s valuation skyrocketing. Shares closed the day up more than 80%, pushing its market capitalization to just over $8 billion. Before Friday’s surge, WeRide was largely unknown on Wall Street, but NVIDIA’s reported stake has suddenly brought the company into the spotlight. Here’s a deeper look into WeRide and its potential future trajectory.
WeRide: A Pioneer in Autonomous Driving Technology
Founded in February 2017 by Tony Xu Han and Yan Li, WeRide specializes in autonomous driving technology. The company has developed an extensive portfolio of self-driving solutions, including Robotaxi, an autonomous ride-hailing service; Robobus, a self-driving bus for urban mobility; Robovan, a logistics-focused autonomous vehicle; Robosweeper, an AI-powered street-cleaning vehicle; and advanced driving solutions for urban logistics and environmental sanitation. Headquartered in Guangzhou, China, WeRide aims to be at the forefront of smart mobility and revolutionize transportation with cutting-edge AI technology.
NVIDIA and WeRide’s Longstanding Partnership
While NVIDIA’s recent disclosure of its stake in WeRide caught investors’ attention, their partnership is not new. WeRide’s IPO prospectus states, “We have been working with NVIDIA since 2017, when NVIDIA became our early-stage investor. The partnership has since expanded to include the adoption of multiple NVIDIA products, such as cloud-based GPU clusters and the NVIDIA DRIVE Xavier system-on-a-chip (SoC). We plan to leverage the power of NVIDIA DRIVE Orin SoC to accelerate the deployment and commercialization of our autonomous driving vehicles.”
This long-term collaboration suggests that NVIDIA sees significant potential in WeRide’s AI and self-driving technology.
The SoundHound AI Effect
Although NVIDIA’s position in WeRide is small relative to its overall market capitalization, it holds significant implications for WeRide. A similar scenario played out with SoundHound AI (NYSE: SOUN). When NVIDIA’s stake in SoundHound was revealed, the stock surged by as much as 200% throughout last year. However, when NVIDIA sold its position on Friday, shares of SoundHound plummeted by over 28% in a single day.
This highlights a key risk: while NVIDIA’s backing can boost confidence, it doesn’t guarantee long-term support. If NVIDIA decides to sell its stake in WeRide, the stock could experience substantial volatility.
What’s Next for WeRide?
Following Friday’s explosive rally, WeRide had a market capitalization of almost $8.1 billion as of Friday’s close. However, the company’s revenue generation remains modest. In its most recent quarter, WeRide reported revenue of just $10 million, a mid-single-digit decline from the previous year.
While NVIDIA’s continued support is a bullish sign, investors might want to proceed with a degree of caution given Friday’s explosive move higher, which diminishes the potential for skewed risk: reward going forward. WeRide remains a high-risk, high-reward stock. The example of SoundHound AI underscores the potential for both rapid gains and significant losses depending on market dynamics and NVIDIA’s future decisions.
From a technical standpoint, WeRide is now trading at all-time highs with no overhead resistance. If the stock consolidates and stabilizes after its surge, it could present momentum trading opportunities for another leg higher. However, given its volatility and lack of analyst coverage, WeRide may not be well-suited for traditional, long-term investors until further coverage and research emerge.
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