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Shares of Serve Robotics (NASDAQ:SERV) are up more than 50% this morning after rising nearly 190% on Friday. The stock’s surge last week was sparked by the announcement that Nvidia (NASDAQ:NVDA) had taken a relatively small stake in the robotics startup.
Founded in 2017, Saab sells zero-emission robots that have achieved Level 4 autonomy. The company says its robots are “capable of operating routinely without human intervention, with on-board features ensuring safe operation.”
What you need to know about Servo Robotics
In May, Serve Robotics revealed it had entered into a partnership with Uber Technologies (NYSE:UBER), which will allow select Uber Eats customers in Los Angeles to have their meals delivered by Serve robots.
In April, Nvidia converted the promissory notes it purchased into 1.05 million shares of SERV stock. At current prices, the chipmaker’s stake is worth about $12 million.
Saab made just $207,000 in revenue in 2023, but sales for the past 12 months were $1.11 million. In the first quarter of 2024, Saab reported revenue of $900,000.
At the time of writing, SERV stock is trading at an astounding price-to-sales multiple (P/S) of 250x.
Will Serve Robotics and Nvidia help each other?
Serve is a small but leading player in the autonomous robotics space, using Nvidia’s Jetson platform for its robots’ artificial intelligence (AI) computing. If Serve gains more customers and continues to see strong revenue growth, it could generate significant revenue for Nvidia in the coming years. Importantly, seeing Serve’s success with Nvidia’s AI chips, other autonomous robot makers may follow suit and incorporate Jetson into their products.
On the flip side, of course, Serve Robotics will benefit from the money Nvidia has invested in the startup, and it could also benefit from the chipmaker’s expertise and corporate connections.
That being said, investing in SERV stock right now could be a risky move, given its current extremely high valuation.
As of the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article.The opinions expressed in this article are those of the author in accordance with InvestorPlace.com’s Publishing Guidelines.
On the date of publication, the editor in charge did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Larry Ramer has been researching and writing about U.S. stocks for 15 years. He has worked for The Fly and Globes, Israel’s largest business newspaper. Larry began writing his column for InvestorPlace in 2015. Some of his highly successful contrarian stock picks include SMCI, INTC, and MGM. Contact him on Stocktwits: @larryramer.
