Is Serve Robotics (SERV) A Buy After Nvidia’s Exit?

One of the top tech companies, Nvidia (NASDAQ:NVDA), supplies artificial intelligence chips for data centres, but the company has a lot more under its portfolio. Even the slightest interest from Nvidia attracts everyone’s attention. The company has taken several companies to new highs and made them large industry players.

One such company is Serve Robotics (NASDAQ:SERV), where Nvidia took a 10% ownership stake. Serve Robotics uses Nvidia’s platform to autonomously deliver food orders for other platforms like Uber Technologies (NYSE:UBER) Uber Eats. Until last year, Nvidia was its biggest shareholder. The company sold its entire stake at the end of 2024, and the reason behind this is unclear. 

After the announcement, Serve Robotics’ stock lost about 55% of its value and is exchanging hands for $10.34 today, down 29% year-to-date. There are several catalysts working for the company that could make Serve Robotics a viable investment despite Nvidia’s exit. However, that may not be enough to help Serve Robotics swim through a rough tide. 

Low revenue and mounting losses 

Serve Robotics focuses on the development and deployment of autonomous delivery robots. It offers a one-of-a-kind solution that helps businesses reduce delivery costs and improve efficiency. It is on track to deploy about 2,000 Gen3 robots in 2025 under a deal with Uber Eats. It has already launched 250 in the first quarter. Its robots have shown tremendous success and achieved Level 4 autonomy, allowing them to drive on sidewalks in identified areas without any human intervention. The robots have already completed more than 100,000 deliveries for restaurants in Los Angeles. 

The company reported a revenue of $440,465 in the first quarter, and its losses are growing. Serve Robotics reported a loss of $13.2 million in the quarter, which means the annual loss could be higher than last year. For now, it has enough cash balance ($198 million) to enjoy flexibility. For the second quarter, the management is aiming for revenue in the range of $600,000 to $700,000 and aims to deploy 700 Gen 3 robots before the fourth quarter.

Running an autonomous technology business is expensive, and the biggest cost is research and development, which accounts for a major part of the total operating expense. No matter the company, this is something that wouldn’t change. So, even if Serve Robotics manages to generate a higher revenue, it may not be able to report a profit anytime soon.

That said, the company heavily relies on a single client for a large part of its revenue. Serve Robotics could become the next big thing in the trillion-dollar industry, but that’ll take a few more years. It is also facing competition from other robotic delivery companies.

Not the best bet

The company’s revenue is low, and even if we assume that it manages to report higher revenue numbers this year, it will be far from profitable. If we believe that the company will manage to capture a large part of the robotics and drones addressable market, then the stock could be a bargain. However, I would prefer a wait-and-watch approach. There are several risks to keep in mind when betting on Serve Robotics. The company is in its early stages and rose to fame due to Nvidia and Uber. I’d recommend keeping an eye on the stock as it improves the financials. 

The post Is Serve Robotics (SERV) A Buy After Nvidia’s Exit? appeared first on 24/7 Wall St..