Cerence CRNC is experiencing a surge in demand attributable to an expanding clientele and a robust partner base. Its recent collaboration with technology mammoth Microsoft MSFT has set the wheels in motion for unprecedented growth.
Empowering In-Vehicle Experiences with Microsoft Collaboration
This landmark partnership seamlessly integrates Cerence’s automotive technology and professional services with Microsoft Azure AI Services. The primary focus is to elevate in-vehicle user experiences by incorporating OpenAI’s ChatGPT model through Microsoft Azure OpenAI Service.
By deploying these capabilities to vehicles equipped with Cerence Assistant, their flagship in-car assistant platform, the collaboration aims to deliver added post-purchase value for automakers and boost user interfaces.
The joint venture leverages Cerence’s profound transportation expertise and Microsoft’s cloud capabilities to offer unparalleled in-car experiences while preserving automakers’ uniqueness and customer relationships.
With continuous updates powered by Azure, Cerence is fortifying its position as a front-runner in AI for the automotive industry, providing an enriched user experience with diverse knowledge and real-time data.
Strong Partner Base Amplifies Cerence’s Prospects
Cerence’s partnership with Microsoft, merging automotive technology with Azure AI Services, aligns seamlessly with its goal to redefine in-car user experiences. This partnership, combined with the company’s robust software platform, has resulted in efficient client wins and a remarkable 54% global auto penetration.
Moreover, Cerence has solidified its position with 14 strategic wins in fiscal 2023, including several key victories in the automotive and two-wheeler segments. Additionally, the company recently forged a collaboration with NVIDIA NVDA wherein it introduced the Cerence Automotive Large Language Model (CaLLM), powered by NVIDIA, to revolutionize in-car computing platforms and enhance user experiences with generative AI capabilities.
Highlighting its strides in the Chinese market, Cerence secured nine design wins in fiscal 2023 and partnered with China OEM Loncin Motors to implement Cerence Ride for AI-powered voice interaction in its high-end motorcycle line.
Robust Outlook for Cerence
Cerence’s expanding clientele is a major catalyst for top-line growth. The company anticipates revenues between $128 million and $132 million for the first quarter of fiscal 2024. The Zacks Consensus Estimate for revenues stands at $130.89 million, indicating a year-over-year growth of 56.46%.
Non-GAAP earnings for the fiscal first quarter are expected to be in the range of 84-92 cents per share, with the consensus mark for earnings pegged at 90 cents per share and remaining unchanged in the past 30 days.
Zacks Rank & Other Key Stocks
Cerence currently holds a Zacks Rank #2 (Buy). Despite a 37.1% decline in its shares year to date, the company’s prospects in the Computer & Technology sector are promising.
Another notable stock in the broader technology sector is Camtek CAMT, which currently boasts a Zacks Rank #1 (Strong Buy) and has returned 98.7% in the past six months. The long-term earnings growth rate for CAMT is pegged at 12.26%.