Ways To Play The AI Theme At CES 2017

The upcoming CES event, scheduled to commence in Las Vegas on January 5, has become “largely an automotive show,” KeyBanc Capital Markets’ Brad Erickson said in a report. He added that every consumer-facing company seems to be investing in machine learning or artificial intelligence.

AI To Be A Focus At CES

AI will likely be a focus for consumer categories. “Whether it's neural network development for self-driving cars, voice recognition for consumer devices or everyone's favorite, bots, we think almost every consumer-facing company out there is exploring ways that machine learning can automate or enhance their business in the future,” Erickson commented.

CES should give more clarity on how competent automotive OEMs will be at developing their own algorithms. Moreover, the event should indicate whether the “general programmable titans of the chip industry” could win the “processing power race,” just as they have in several end markets, Erickson stated.

For consumer categories, the overall consumer acceptance and demand for various AI implementations is yet to be understood.

Company-Specific Commentary

Autoliv Inc. (NYSE: ALV) — Investors looking for evidence of any win rate improvement for Autoliv’s mono and stereo vision product segment would be looking forward to the company’s active safety demonstrations. “We also expect ALV to place strong emphasis on utilization of artificial intelligence (AI) technology as a means to accelerate safe autonomous development,” the analyst wrote.

Delphi Automotive PLC (NYSE: DLPH) — Erickson expressed optimism regarding positive growth and margin commentary related to ~$1 billion active safety new business bookings in 2016. The discussions may be dominated by autonomous driving. At CES, the focus for Delphi is likely to be on the 2019 production ready Centralized Sensing Localization and Planning automated driving system with Mobileye. KeyBanc has an Overweight rating on Delphi, with a price target of $85.

NVIDIA Corporation (NASDAQ: NVDA) — The company’s CEO is to kick off CES with a keynote address on Wednesday. The CEO is expected to discuss artificial intelligence, self-driving cars, virtual reality and gaming. “We will also attend a meeting with NVIDIA’s CFO on Friday morning to discuss company growth drivers for F2018,” Erickson said. NVIDIA has a Sector Weight rating at KeyBanc.

Mobileye NV (NYSE: MBLY) — There would likely be several catalysts during CES. NVIDIA’s keynote could be a negative for Mobileye, in case the former announces any major partnerships or design wins. “Alternatively, we expect MBLY to provide more detail on its mapping and monetization strategy, possibly complemented by the announcement of a formal deal with Volkswagen, which bulls have been waiting for all year,” the analyst wrote, while maintaining a Sector Weight rating on Mobileye.

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