3 Autonomous Driving Stocks You Better Be Buying on Each and Every Dip
2023 has brought to us an equities market rebound and novel improvements upon language-based artificial intelligence. These two phenomena have, in one way or another, complemented each other. The Nasdaq, which has skyrocketed to a 34% year-to-date (YTD) return, has been lifted by businesses spurring the AI advancement, such as Nvidia. This has led to the rise of autonomous driving stocks
Though equity investors and market-watchers alike seem assured artificial intelligence will play an influential role in humanity’s future, some might not be sure which kinds of equities will substantially benefit from the AI revolution. Autonomous driving businesses may be the place to look. In the United States and abroad, there is a demand not only for vehicles with low emissions but also for vehicles that bring safety to the roads through advanced, autonomous safety systems.
Consulting firm McKinsey has predicted autonomous vehicles will generate between $400 and $500 billion in revenue by 2035, spelling substantial opportunities for patient investors who are invested now. Below is a list of autonomous vehicle stocks investors should consider adding to their portfolio at every opportunity.
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Aptiv (APTV)
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Aptiv (NYSE:APTV) is a global technology company developing components for automotive businesses. It provides software, hardware, and systems solutions for advanced safety, connectivity, electrification, and autonomous driving. The business centers around two core offerings: Signal and Power Solutions and Advanced Safety and User Experience. The former encompasses all components critical to a car’s electrical “architecture”, including wiring assemblies and voltage distribution systems.
The latter offering involves technologies critical to ensuring passenger safety and cloud-based software powering a vehicle’s infotainment system. Aptiv has carved out for itself a strong market position in the autonomous driving industry, with a number of large auto manufacturers employing its products, including General Motors (NYSE:GM), The Ford Motor Company (NYSE:F), Volkswagen (OTCPK:VWAGY), and Tesla (NASDAQ:TSLA)
In 2022, Aptiv reported revenue of $17.5 billion, up 12% year-over-year, and net income of $594 million, representing a net margin of 3.4%. Aptiv also generated $2.0 billion in adjusted EBITDA. Aptiv has made the list because it has not only an expansive portfolio of products and services that cater to the growing demand for autonomous and electric vehicles but also because of its diverse, global customer base.
Luminar Technologies (LAZR)
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The second contender on this list is Luminar Technologies (NASDAQ:LAZR), a leading provider of lidar technology. Lidar uses lasers to measure distances and create 3D maps of the environment. This innovative technology is a key component of autonomous driving systems since it enables vehicles to perceive and navigate complex scenarios.
Luminar has recently developed and launched a new lidar dubbed “Iris,” which combines both laser transmitter and receiver to provide long-range 1550 nm sensory. This laser will allow autonomous vehicles a visibility range of 300 meters. In February, Mercedes Benz (OTCPK:MBGYY) announced it would add Luminar’s new Iris lidar into a “broad range” of its vehicles.
Luminar is still a relatively new company; thus, it has a long way to go in order to reach profitability. Last year, the company reported only $41 million in revenue, up 27% year-over-year, with a net loss of $446 million. However, in Luminar’s Q1’2023 earnings print, the technology company beat Wall Street’s revenue estimates on the back of strong demand and adoption of its technology by established automakers. Ultimately, the development of innovative, proprietary technology and access to a large total addressable market, make Luminar Technologies a compelling investment for the long term. This means it’s one of those autonomous driving stocks to buy.
Aurora Innovation (AUR)
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Aurora Innovation (NASDAQ:AUR) is a leading developer of self-driving technology for various vehicle types, including passenger cars, trucks, and delivery vans. Aurora’s vision is to deliver the benefits of self-driving to everyone by creating a safer, more efficient, and more accessible transportation system. Aurora has a strong team of experts in artificial intelligence, robotics, and engineering, as well as partnerships with industry leaders such as Toyota, Uber (NYSE:UBER), Volvo (OTCPK:VLVOF), PACCAR (NASDAQ:PCAR), and FedEx (NYSE:FDX).
Similar to Luminar Technologies, Aurora is a rather nascent company and has not begun a commercial launch of its product. The company’s small revenue figures reflect that. In 2022, Aurora reported $68 million in revenue and net loss of $1.7 billion. Revenue was mostly derived from a partnership with Toyota. In Q1’2023, the company recorded zero revenue. Fortunately, this month, Aurora raised $820 million through a private placement of its common stock, which should provide the company with enough runway for its commercial launch in 2024 and into 2025.
Aurora has made the list because it has a differentiated approach to the self-driving technology niche, focusing primarily on autonomous trucks. According to Wall Street analysts, Aurora has an average price target of $4.71, implying a 12-month upside potential of 73% from its current price of $2.72. This makes it one of those autonomous driving stocks to buy.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.
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