NvidiaIt is (NVDA -3.22%) The stock has soared 2,630% over the past five years, increasing its market capitalization to around $3.5 trillion and making it the most valuable company in the world. Most of this increase is due to its sustained sales of AI-oriented GPUs for data centers.

From fiscal 2019 to fiscal 2024 (which ended in January), Nvidia’s revenue grew at a compound annual growth rate (CAGR) of 39%. But from fiscal 2024 to fiscal 2027, analysts expect its revenue to grow at an even faster CAGR of 53% as the AI ​​market continues to expand.

Image source: Serving Robotics.

This secular trend makes Nvidia a great long-term investment, but it may struggle to replicate its millionaire gains of recent years. So if you’re looking for the “next Nvidia,” you might want to look at the smaller AI companies the chipmaker is investing in.

One such company that stands out is Serving robotics (SERVE -1.54%)a producer of Powered by AI sidewalk delivery robots. Let’s see if this small $384 million company could eventually become a billion-dollar tech giant like Nvidia.

A small player in a nascent market

Serve Robotics was founded in 2017 as part of Postmates, the food delivery service acquired by Uber Technologies (UBER 2.69%) and integrated into Uber Eats in 2020. Uber then spun off Serve Robotics as an independent company in 2021, but it continued to use its delivery robots to fulfill orders in certain areas of Los Angeles. Its new Gen 3 robots can travel 48 miles on a single charge, carry up to 15 gallons of cargo and have a top speed of 11 mph. They are also resistant to extreme temperatures and heavy rain.

Serve Robotics completed a reverse merger with blank check company Patricia Acquisition in 2023, paving the way for its Nasdaq listed at $4 per share on April 18. But it ended the first day at just $3.11 and fell below $3 by the end of its first month.

Today, Serve stock is trading near $9. Most of this rally occurred in July after Nvidia revealed that it had taken a 10% stake in the company. This vote of confidence brought back plenty of bulls, even though the company still generates virtually no revenue.

How big can Serve Robotics grow?

Serve has a fleet of 100 robots, but only operated 59 active robots in the Los Angeles area for Uber Eats in the third quarter of 2024. It only generated $1.6 million in revenue in the first nine month of 2024 and recorded a net loss. of $26.1 million.

For the full year, analysts expect revenue of $1.9 million with a net loss of $34.3 million. With an enterprise value of $384 million, it may seem ridiculously overvalued, at more than 200 times this year’s sales. But in 2025, Serve plans to deploy up to 2,000 robots for Uber Eats in the Los Angeles and Dallas-Fort Worth metro areas.

Assuming it achieves this ambitious expansion, analysts expect its revenue to climb to $13.3 million in 2025 and $59.5 million in 2026. Therefore, we could say that Serve is not very expensive, at around 6.5 times its 2026 sales.

If Serve succeeds in growing its fleet of autonomous delivery robots for Uber Eats, it could attract much more attention from other delivery-focused companies. These new customers would reduce its dependence on Uber and boost its long-term growth.

According to Precedence Research, the global delivery robot market could grow at a CAGR of 32% between 2024 and 2034. This growth could be driven by labor shortage, increasing online sales and the development of more efficient autonomous robots. These small robots could also be seen as a safer, cheaper and more reliable alternative to human drivers for last-mile deliveries. So, if the company can break out of its niche, it could generate huge gains in the long term.

But could Serve Robotics become the next Nvidia?

Serve may have a bright future, but it’s too early to tell if it can ramp up production, attract more customers, and diversify its business with other types of autonomous robots. So while we can’t seriously call it the “next Nvidia” just yet, it’s easy to see why Nvidia bought a piece of this young AI company. Investors looking for a high-risk, high-reward play in the booming AI market may want to consider following Nvidia’s lead.