BlackBerry's Comeback Starts With Jarvis

Shares of BlackBerry (TSX: BB) touched yearly highs, then fell, after the CEO announced Jarvis and other automobile technology-related news at CES 2018. Markets realize the revenue from the initiative will have little impact to the bottom line in the near-term.

BlackBerry is helping car makers tighten their security with Jarvis by helping to detect security flaws in connected cars. For investors looking for a sustainable rally in the stock price, it will not happen easily with the company moving away from smartphones. The company mostly abandoned its focus on profiting from its iconic keyboard software. Instead, it believes the higher software content in connected cars will bring in revenue.

Cars are becoming more powerful than computer desktops. They have thousands of chips that control such things as cameras, ADAS, navigation, vision sensing, radar, and AI. Intel (NASDAQ: INTC) continued its diversification away from desktop chips when it bought Mobileye. Ambarella (NASDAQ: AMBA) lessened its reliance on GoPro (NASDAQ: GPRO) by developing CV1, a chip in the EVA (embedded vehicle autonomy space). Ambarella continued building awareness for CV1 at CES 2018 when it announced the wider spectrum for CNN engine architecture implementations.

Takeaway

Look for the rally in BlackBerry stock to fade again, though the long-term trend is up as its revenue grows from the connected car market.