Cerence (CRNC) Launches CaLLM in Collaboration With NVIDIA
Cerence CRNC recently launched its automotive specific large language model, Cerence Automotive Large Language Model (“CaLLM”), powered by NVIDIA NVDA. CaLLM will be the foundation on which CRNC is set to build its next-generation in-car computing platform, running on the NVIDIA DRIVE platform.
Cerence and NVIDIA are collaborating to solve challenges faced by automakers related to the usage of generative AI and LLMs in improving user experience. CaLLM is well-equipped to solve this issue, given its unique level of automotive-specific intelligence.
CaLLM leverages Cerence’s extensive automotive expertise and growing automotive dataset encompassing billions of tokens to deliver integrated in-car user experiences. Cerence will train CaLLM on its extensive dataset using NVIDIA’s DGX Cloud and DGX systems and then develop the capabilities required for in-car user experiences.
Cerence is building CaLLM with the NVIDIA AI foundry service, which includes NVIDIA’s AI Foundation Models, AI Enterprise software and accelerated computing. To develop an ultrafast user experience, CRNC will deploy CaLLM in an NVIDIA-accelerated infrastructure with NVIDIA AI Enterprise.
Strong Portfolio Aids Cerence’s Prospects
Cerence is benefiting from the robust software platform that is helping it to win clients. Its platform allows OEMs to quickly, easily and cost-efficiently deploy new AI-driven applications in their cars. On a trailing 12-month basis, Cerence’s global auto penetration has stayed strong at 54%.
Cerence Inc. Price and Consensus
Cerence Inc. price-consensus-chart | Cerence Inc. Quote
The company has been benefiting from an expanding clientele with 14 strategic wins in fiscal 2023. In fourth-quarter fiscal 2023, it secured several strategic wins, including three in automotive and another in the two-wheeler space.
In August, Boson Motors, a Bay Area-based electric truck company, selected Cerence to enhance the in-vehicle experience in its wide range of electric trucks.
In June, CRNC announced that Mercedes-Benz AG, in its intuitive multimedia system, MBUX, in the new Mercedes-Benz E-Class, has selected Cerence JustTalk, an AI-powered capability for automotive assistants that eliminates the need for a push-to-talk button or wake-up word.
CRNC has also been expanding its footprint in the Chinese market. Cerence assistant had nine design wins in the fiscal year. In May, China OEM Loncin Motors selected Cerence Ride to enable AI-powered voice interaction for riders of its high-end motorcycle line.
Outlook Strong
Cerence’s expanding clientele aids top-line growth. For first-quarter fiscal 2024, it expects revenues between $128 million and $132 million. The Zacks Consensus Estimate for revenues is pegged at $130.89 million, indicating year-over-year growth of 56.46%
Adjusted EBITDA is projected in the range of $58-$62 million. Non-GAAP operating margin is anticipated in the range of 44-46%. Non-GAAP earnings for the fiscal first quarter are expected to be in the range of 84-92 cents per share.
The consensus mark is pegged at 90 cents per share, up 275% over the past 30 days.
Zacks Rank & Other Stocks to Consider
Cerence currently has a Zacks Rank #2 (Buy).
CRNC shares have underperformed the Zacks Computer & Technology sector in the past year. While its shares have dropped 1.8%, the sector has risen 49.7%.
Ceridian HCM CDAY and Dropbox DBX are some other top-ranked stocks that investors can consider in the broader sector, each carrying a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past year, shares of Ceridian HCM and Dropbox have gained 7.5% and 34.5%, respectively.
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