From ultra-precise navigation systems to fully electric vehicles, the technology that powers our most prevalent means of transportation advances exponentially each year. Not very long ago, it was difficult to conceive a car that drove itself. This vision is becoming a reality, however, as a result of the efforts of a number of firms developing new technology to power autonomous cars. The widespread usage of autonomous cars might be on the horizon sooner than you think, so it may be worthwhile to begin monitoring the firms striving to make it a reality.
What makes a good self-driving car stock?
After gaining a deeper grasp of the self-driving car business and its essential components, the next step is to decide which firms have the most potential. When evaluating autonomous car stocks, it is essential to examine the following factors:
1. Growth Prospects
Again, we must examine the company’s or stock’s development prospects, but this time on a more direct and individual level.
What technology do the business owners use, and what makes it unique?
What benefits contribute to the company’s success in the autonomous car industry?
How will the firm continue to grow?
How is the organization organized, and who are its leaders?
These questions will assist you in evaluating a firm’s growth prospects for your investment portfolio.
Investing is not just about rapid growth potential but also about risk mitigation. Consider firms in this industry with a track record of performance and a high level of credibility when evaluating individual stocks.
Trusting established institutions reduces the amount of uncertainty involved. Consider a prosperous corporation with robust revenue sources. In this situation, they are more likely to seek new business opportunities, such as research and development, acquisitions of key competitors/new technologies, and an increase in quality and safety testing trials.
If we know where to invest in the self-driving industry, we can confirm that we are investing our money in a company whose business, moral, and technological practices we can trust.
3. Innovative Capability
Trusting a company is a necessary first step, but confirming they’re inventive is vital.
The autonomous vehicle business is still in its infancy. Therefore, organizations in the industry must have the capacity and expertise to develop, innovate, and enhance the many technologies available.
It is not sufficient to merely have a novel and unique concept. When investing in autonomous car stocks, it is essential to focus on companies that have the technological and financial means to succeed. Observe revenue streams, strategic alliances, and attainable objectives.
Velodyne Lidar, Inc. (VLDR)
VLDR delivers global autonomous systems with real-time 3D vision and surround-view lidar for autonomous cars, drones, security, mobile robots, mapping applications, and solid-state lidar for enhanced driver assistance systems and autonomous applications. VLDR is based in San Jose, California.
VLDR’s overall revenue for the fourth quarter, which concluded on December 31, 2021, was $17.54 million. Gross profit was $2.69 million, compared to a gross loss of $5.34 million in the same quarter of the prior year. The company’s cash and cash equivalents were $24.06 million at the conclusion of its fiscal year on December 31, 2021.
In fiscal 2023, VLDR is anticipated to produce $74.01 million in sales, indicating a year-over-year increase of 46.5%. Moreover, the company has exceptional history of profits surprises; in three of the preceding four quarters, it exceeded the consensus EPS projection.
Two Wall Street experts recommended the stock as Buy, while three analysts ranked it as Hold. The median 12-month price target of $4.98 suggests a potential upside of 104.1%, and the pricing objectives range from two dollars to twelve dollars. The stock finished the previous session at $2.44 per share.
Memory chips have been an integral component of automobiles for decades. However, autonomous vehicles will rely heavily on digital memory. Micron is a car leader and is seeing tremendous expansion as manufacturers want more memory chips to provide self-driving and ADAS capabilities.
In fact, Micron believes autonomous vehicles will be its primary growth engine over the next several years. Cloud computing, which is used to train AI software and manage car fleets, is also driving up demand for Micron’s memory chips. As a manufacturer, Micron is a highly cyclical semiconductor business with a history of erratic sales and profit fluctuations. However, self-driving technology offers enormous growth potential in the next few years.
Tesla’s efforts to drive the electric car revolution are clear. However, its efforts to develop fully autonomous driving capabilities are more contentious. Every Tesla is equipped with Autopilot, an advanced driving assistance system (ADAS) that includes adaptive cruise control and a lane-keeping car. The company’s Full Self-Driving (FSD) upgrade package includes several more functions that nevertheless require a driver to be vigilant and prepared to take control. FSD Beta, a restricted test involving a subset of FSD system users, claims to enhance these capabilities with autopilot navigation and city street auto steering. However, CEO Elon Musk’s assurance that FSD will achieve total autonomy remains unmet.
Unlike most other manufacturers, Tesla aims to build self-driving technology without lidar (“light detection and ranging,” or the use of lasers to assist a car map its surroundings). Instead, it focuses on computer vision, which enables a computer system to perceive and make driving judgments using cameras. Tesla is constructing a supercomputer named “Dojo” to train its artificial intelligence algorithms. The firm has suggested that it may permit other autonomous car companies to utilize Dojo.
Ford Motor Co. (F)
In 2017, Ford invested $1 billion in Argo AI, a startup developing autonomous vehicles, representing a significant investment in the AV market. Ford is collaborating with the company in Miami, Washington, D.C., and Texas to develop a commercial self-driving ride-hailing service. Additionally, the business has teamed with Walmart Inc. (WMT) to give autonomous cars to the retail behemoth, enabling more efficient last-mile food deliveries nationwide. Thanks to its BlueCruise technology, many of Ford’s current production vehicles are already equipped with self-driving technology. According to the company’s projections, connected advanced-driver-assistance systems are anticipated to generate $20 billion in yearly revenue by 2030.
Luminar Technologies, Inc. (NASDAQ: LAZR)
Luminar Technologies, Inc. (NASDAQ: LAZR) is a vehicle sensor and software provider. It is divided into two divisions: Autonomy Solutions and Other Component Sales. The company’s technology and lidar sensors are utilized in autonomous vehicles, and it ranks tenth on our list of the top stocks to invest in self-driving cars.
With the June 25 news that the company’s lidar sensors will be standard on all Volvo EVs by 2022, Baird raised its rating on Luminar Technologies, Inc. (NASDAQ: LAZR) to Outperform and set a price objective of $30 per share. Luminar Technologies, Inc. (NASDAQ: LAZR) is aiming for profitability by 2024, according to the company’s CFO, and expects to finish 2021 with greater liquidity than its $485.7 million in December 2020 and $610.3 million in March of this year. Earnings per share for Luminar Technologies, Inc. (NASDAQ: LAZR) were -$0.08, missing estimates by -$0.04, while sales of $5.31 million were above forecasts by $0.48 million. The stock price has also increased by 118.68% in the past year.
By the end of the first quarter of 2021, 12 hedge funds out of 866 monitored by Insider Monkey had about $39.2 million worth of Luminar Technologies, Inc. (NASDAQ: LAZR) shares. During the preceding quarter, there were 25 hedge fund investors with a combined investment of around $160 million. This is a solid investment stock, comparable to Tesla, Inc. (NASDAQ: TSLA), Ford Motor Company (NYSE: F), Alphabet Inc. (NASDAQ: GOOG), and General Motors Company (NYSE: GM).
General Motors (NYSE: GM)
General Motors is a well-known and established automaker. The firm has demonstrated its power and innovation for more than a century, maintaining its leadership position since its founding.
In addition, GM has been an important inventor and pioneer in a variety of transportation-related technology. As the demand for electric vehicles grew, the business began selling its own EVs and has now committed to delivering 30 new EVs by 2025.
As the market for autonomous vehicles begins to emerge, it is only natural for GM to become a major participant in this sector as well. The company introduced a program called Cruise. Cruise LLC, GM’s self-driving company, is not to be confused with the Chevrolet Cruze.
In January of 2020, the business will show its first autonomous car without a steering wheel. That’s correct; you hop in the car, punch in the destination, and drive away. According to The Verge, by December 2020, the business was testing autonomous cars in San Francisco, one of the most crowded cities in the United States.
You are not simply investing in their autonomous portfolio when you invest in General Motors. You are investing in more than a century of supremacy in the vehicle business, a dominance that will likely remain for the foreseeable future due to continuous innovation. Overall, GM is a stock that deserves close attention.
As discussed with the other tech stocks on our list, artificial intelligence is essential to the development and operation of autonomous cars, and Google possesses some of the most advanced AI technologies.
The same artificial intelligence technology that powers Google, the world’s leading search engine, may be utilized to construct self-driving automobiles. With stronger AI technology, Google has a significant advantage over almost all competitors.
In addition to possessing key AI technology, Alphabet also owns the ridesharing business Waymo. Similar to Aptiv, Alphabet has shown interest in digital taxi services.
The objective is to deliver a smooth customer experience while eliminating the majority of expenses traditionally associated with ridesharing. Waymo One is the name of the company’s pilot program in Phoenix, Arizona.
A disadvantage of investing in Alphabet is that self-driving cars are still a small component of a large firm.
Even more than GM or Ford, several more external variables unrelated to autonomous vehicles might impact the stock price.
Ambarella is a firm that primarily creates system-on-a-chip (SoC) semiconductors with low power consumption. In addition, it focuses on developing AI technology that enables edge devices to visually perceive their surroundings and make judgments based on camera and sensor data.
Now, automotive solutions from Ambarella are intended for both human and computer vision. This integrated platform combines high-resolution imagery and neural network computation. Among them would be front ADAS cameras, intelligent electronic mirrors, driving recorders, fleet management solutions, and many others. Consequently, may the company’s technology play a significant part in the future of autonomous driving?
In September, the business formed a deal with China’s Dongfeng Motor Group. The objective of the partnership is to create a Driver Monitoring System (DMS) using Ambarella’s CV25 AI vision SoC and development platform. The first car to mass-produce this technology is the Dongfeng Yixuan Max, and this will lower the likelihood of car accidents and boost the driver’s safety.
Texas Instruments (TXN)
Texas Instruments is a corporation specializing in designing and producing semiconductor devices. It was founded in 1951 and has become the world’s second-largest semiconductor device producer. It is a multibillion-dollar enterprise seeing continuous expansion.
Texas Instruments reported $18 billion in revenue in 2021, up from $14.5 billion the year prior. Texas Instruments has produced more than $14 billion in sales from the analog business and an additional $3 billion from its embedded processor segment.
Texas Instruments is a business that has recently focused its efforts on the automobile sector utilizing its creative and revolutionary analog chips. They can allow your vehicle’s sensors to “see” the surroundings and supply you with all the data necessary to generate robust digital outputs.
The car business is a prime illustration of how technology has altered and improved several elements of our lives. However, as technology evolves, output rates may occasionally be constrained.
Incorporating the Internet of Things (IoT) into physical buildings is one way to address the issues of evolving work settings. This has begun to occur and has shown to be quite useful in many areas.
Nowadays, cars frequently rely on data from other sources. As with other gadgets and add-ons, this information improves the performance of automobiles. The firm is an industry leader in the technology used in home entertainment systems. They have been working on future advancements for a considerable amount of time.
Therefore, autonomous vehicles will result in remarkable profits for the semiconductor manufacturer. Texas Instruments anticipates that they will also benefit from this trend. This makes TXN stock one of the top stocks for autonomous vehicles available.
It is a pioneering business in laser beam scanning technology. The firm specializes in lidar systems, which utilize laser beams to create three-dimensional photographs of the environment being scanned. Therefore, developing a map of the surroundings in real-time. So, the plan is for onboard computers to leverage this to aid autonomous vehicles’ navigation. In the past year, the company’s stock has surpassed all forecasts. Prior to this year, MVIS stock was still considered a penny stock, but it has subsequently increased by more than 300% year-to-date.
MVIS stock is, of course, a popular meme stock on the subreddit r/wallstreetbets. And this explains the recent momentum of the firm. The stock’s inclusion in the Russell 2000 Index is an additional plausible rationale for the price increase. Despite the company’s disappointing first fiscal quarter, in which revenues dropped 67%, and net losses worsened, the company’s gamble on lidar might pay off handsomely if it can secure an automotive contract.
TuSimple Holdings Inc. (TSP)
Based in San Diego, California, TSP is an autonomous technology firm that develops autonomous technology for semi-trucks on a global scale and plans to manufacture a line of purpose-built (Level 4) L4 autonomous semi-trucks for the North American market. The firm deploys autonomous Autonomous Freight Network (AFN) L4 semi-trucks outfitted with its autonomous driving technology.
In January, TSP announced its partnership with Hillwood, a major developer of industrial and commercial real estate, to incorporate TSP’s infrastructure standards into existing and future industrial and commercial buildings. The expansion of TSP’s Autonomous Freight Network should enable Hillwood to actively prepare to meet the demands of autonomous trucks by preparing properties for autonomous trucking operations, beginning with the construction of a one-million-square-foot, state-of-the-art facility within its 27,000-acre AllianceTexas development.
Also, in January, TSP expanded its ongoing partnership with NVIDIA to design and develop an advanced autonomous domain controller (ADC) engineered specifically for TSP’s Level 4 autonomous trucking applications and to accelerate TSP’s ability to deploy autonomous trucks at scale on the Autonomous Freight Network (AFN) with a production-ready computing solution. The ADC will feature the NVIDIA DRIVE Orin system-on-a-chip (SoC), built specifically for autonomous driving applications based on artificial intelligence.
TSP’s revenue for the fourth quarter, which concluded on December 31, 2021, climbed 178.2% year-over-year to $2.05 million. For the fiscal year ended December 31, 2021, cash and cash equivalents were $1.34 billion, while net cash created by financing operations climbed by 264.4% to $1.30 billion.
For the first quarter ending March 31, 2022, analysts anticipate TSP’s revenue will rise 214% year-over-year to $2.96 million. Moreover, it has an exceptional profits surprise history; in each of the preceding four quarters, it has beaten the consensus EPS projection.
All nine Wall Street analysts who graded the stock recommended purchasing it. The median 12-month price target of $38.63 shows an upside potential of 185.3%, and the range of price targets is $24.00 to $54.00. The stock finished at $13.54 in its most recent trading session.
Investors who have held autonomous vehicle (AV) stocks for the past year are likely pleased with their performance on the stock market. The issue now is whether or not this momentum will continue. Any successful testing or authorized new technologies will catapult AV stocks to greater heights. Self-driving cars will make our roads safer, which is one of their advantages. Some may inquire, safer? How? Consider the number of car accidents caused by human mistakes, such as speeding, irresponsible driving, or inattention. In contrast, self-driving automobiles are completely analytical and devoid of human emotions.
The rise of autonomous cars and electric vehicles (EV) has piqued the interest of several investors and businesses. Even well-established automakers like Ford Motor Company (NYSE: F) and General Motors Company (NYSE: GM) are not resting on their laurels. These firms acknowledge that the EV and AV markets represent the likely future of the industry. Ford increased their EV and autonomous vehicle investment pledge to $29 billion by 2025 in February, which is a positive indication.