Nvidia (NVDA) CEO Jensen Huang believes Tesla’s (TSLA) full self-driving (FSD) system is the most advanced system out right now. It also just so happens that Tesla’s FSD is powered by Nvidia's chips.

“Tesla is far ahead in self-driving cars,” Huang said in an exclusive interview with Yahoo Finance.

"One of the things that's really revolutionary about version 12 of Tesla's full self-driving is that it's an end-to-end generative model," Huang added.

"It learns from watching videos — surround video — and it learns about how to drive end-to-end, and using generative AI, predict the path and how to understand and how to steer the car. So the technology is really revolutionary and the work that [Tesla’s] doing is incredible."

Tesla's latest FSD, version 12, is currently in beta mode and was rolled out in 30-day free trials to new owners earlier this year. FSD currently costs $99 a month or $8,000 up-front. Tesla reported in April that FSD had over 1.3 billion cumulative miles driven since its debut in March 2021.

FSD is still considered a Level 2 autonomous system, meaning it requires supervised use, and has been subject to recalls and government inquiries into its capabilities.

In the first quarter, Nvidia reported automotive revenue of $329 million, a small sliver of the $22.6 billion in its data center business but up 17% sequentially and up 11% year over year.

Nvidia CFO Colette Kress said on the company’s earnings call she expects automotive to be the “largest enterprise vertical within [the] Data Center [segment] this year,” and a potential multibillion-dollar business for the company.

Most of Nvidia's Data Center revenue, which tallied $22.6 billion the first quarter, came from consumer internet customers. Cloud providers, or the so-called hyperscalers like Amazon (AMZN), Alphabet (GOOG, GOOGL), and Microsoft (MSFT), accounted for a "mid-40s percentage" of this segment's revenue.

Huang also told Yahoo Finance he expects one day "every single car" will have some level of autonomous ability — a development that will require huge amounts of computing power.

“This technology is very similar to the technology of large language models, but it requires just an enormous training facility," Huang said, referring to Tesla's FSD system. "And the reason for that is because there's videos, the data rate of video, the amount of data of video is so, so high."

For example, in order to boost Tesla’s ability to process that amount of data, Nvidia said it helped the company expand its FSD training AI cluster to 35,000 Nvidia Hopper H100 GPUs.

In addition to Tesla, Nvidia's other automotive sector clients include Mercedes, Jaguar Land Rover, Volvo, and Hyundai, as well as Chinese EV upstarts like BYD (BYD) and NIO (NIO).

Wall Street is also bullish on Nvidia’s automotive business.

In a note published Thursday, analysts at JPMorgan boosted their Nvidia price target to $1,150 from $850, modeling the chipmaker’s data center business with a 20-30% annual growth rate with Nvidia monetizing "an incremental ~$14 billion of auto revenue pipeline" over the next three to four years.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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