Graphics chip leader NVIDIA (NASDAQ:NVDA) announced a slew of exciting new products and partnerships at last week's GPU Technology Conference (GTC) 2019. The annual Silicon Valley event is widely considered the premier artificial intelligence (AI) happening of the year, though the company's announcements and demonstrations span its businesses from gaming and data center to professional visualization and automotive.

This year's event, along with NVIDIA's annual investor day last Tuesday, likely held more importance among many industry watchers and investors than usual due to the company's recent struggles in its flagship gaming business, along with its data center platform's growth cooling down. As a result of the company's weak recent financial performance and its tepid outlook for fiscal 2020, at Monday's closing price of $173.78, NVIDIA shares are nearly 40% off their all-time closing high of $288.77, set on Oct. 1. The good news on this front, however, is that when the calendar flipped to 2019, the stock began climbing back and has returned 30.3% so far this year through Monday, outpacing the S&P 500's 12.2% return.

Amid this backdrop, NVIDIA's expanded partnership with Toyota Motor (NYSE:TM) was certainly music to some weary investors' ears, and was probably one of the company's most important announcements at GTC. After all, Toyota was the second largest automaker in the world in 2018, trailing only Volkswagen

Here's what you should know. 

Wing doors on one side of a red sports car raised showing an interior that has seats facing each other and a table with a laptop on it, but no steering wheel -- concept for a self-driving vehicle.

Image source: Getty Images.

The NVIDIA-Toyota partnership

The new collaboration between NVIDIA and teams from Toyota Research Institute-Advanced Development (TRI-AD) in Japan and Toyota Research Institute (TRI) in the United States "builds on an ongoing relationship with Toyota to utilize the NVIDIA DRIVE AGX Xavier AV [autonomous vehicle] computer," according to NVIDIA's press release. The collaboration involves the development, training, and validation of self-driving vehicles.

More specifically, the partnership includes advances in "AI computing infrastructure using NVIDIA GPUs [graphics processing units], simulation using the NVIDIA DRIVE Constellation platform, [and] in-car AV computers based on DRIVE AGX Xavier or DRIVE AGX Pegasus," NVIDIA said. The goals of the collaboration are "the development of an architecture that can be scaled across many vehicle models and types, accelerating the development and production timeline, and simulating the equivalent of billions of miles of driving in challenging scenarios."

Check out the latest earnings call transcript for NVIDIA.

NVIDIA's auto business

NVIDIA's auto platform is the smallest of its four target market platforms, accounting for just over 6% of revenue in the company's most recently reported quarter. However, in the quarter, this platform grew the fastest -- 23% -- on a year-over-year basis. 

Platform

Fiscal Q4 2019 Revenue

Change (YOY)

% of Total Revenue 

Gaming

 $954 million

(45%) 

43%

Data center

 $679 million 

12%

31%

Professional visualization

 $293 million

15% 

13%

Automotive

 $163 million

23%

6%

OEM and IP* (not a target market platform) 

 $116 million

(36%) 5%

Total

 $2.21 billion

(24%)

100%**

Data source: NVIDIA. *OEM and IP = original equipment manufacturer and intellectual property. ** Total adds up to 98%, not 100%, due to rounding. YOY = year over year.

Orders of magnitude more important than last quarter's solid growth, however, is the fact that NVIDIA's auto business has a long runway for powerful growth ahead thanks to what promises to be a secular trend of self-driving vehicles replacing human-controlled vehicles on the world's roads. Fully autonomous cars are widely expected to be legal across the U.S. within the next five years.

Granted, NVIDIA has some stiff competition in this space, as companies from big techs to other chipmakers all want a piece of what's expected to be a humongous market. That said, NVIDIA has to be considered a leader in providing the AI-powered brains for autonomous vehicles. In addition to Toyota, it's inked partnerships with many top companies, including automakers Mercedes-Benz and Volkswagen's Audi unit, and ride-hailing giant Uber.