Advancements in automotive technology are coming at a fast and furious pace, observes technology sector expert Rob DeFrancesco, editor Tech Stock Prospector.

While sheer horsepower may still sell cars today, cars of the future will be bought based on the quality of the technology under the hood and in the dashboard.

Qualcomm (QCOM) is acquiring NXP Semiconductors (NXPI) for a whopping $39 billion.

If approved by regulators (the transaction isn’t expected to close before the end of 2017), the massive deal would combine the #3 global semiconductor maker with the #1 player in the global auto semiconductor market.

About 41% of NXP Semi’s total revenue is related to autos—supplying chips for entertainment systems, secure car access, in-vehicle networking and safety/radar systems.

For Qualcomm, the deal represents a smart diversification strategy away from the slowing growth in the mobile chip sector.

Nomura Securities upgraded QCOM to Buy with a target of $80. The firm estimates earnings in 2018 will see a 30% boost, and it looks for that to lead to P/E multiple expansion.

Chipmaker NVIDIA (NVDA) is another good play on the auto tech trend. While it generates more than half of its total revenue from graphics processors for PC gaming, the auto sector is a key future growth driver, as the company is a leader in autonomous driving technology.

Last month, Tesla (TSLA) announced that all of its cars going forward would be equipped with hardware to support fully autonomous driving, with technology supplied by NVIDIA’s new DRIVE PX2 AI car computing platform.

Using a combination of deep learning and surround vision, DRIVE PX2 merges data from multiple sensors to understand in real-time what’s happening all around the vehicle.

For fiscal 2018 (January), NVIDIA’s consensus revenue estimate of $6.56 billion (growth of 7.4%) has upside potential if the auto-related business ramps more quickly than expected; the Street-high estimate is $7.02 billion.

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By Rob DeFrancesco, Editor of Tech Stock Prospector