With advancing technologies making the unbelievable transition from science fiction into science fact, forward-looking investors may want to consider autonomous vehicles stocks to buy. To be sure, the segment carries significant risks. From both the technical aspect of covering myriad variables to the legal framework, autonomous mobility represents a pioneering endeavor. Still, research and development continue, aiming to crack the self-driving code.
Fundamentally, the case for autonomous vehicles stocks centers on the potential numbers. According to Grand View Research, global demand for artificial intelligence-powered vehicles stood at around 51,600 units in 2021. From 2022 to 2030, experts project that the sector will expand at a compound annual growth rate (CAGR) of 53.6%.
At the culmination of the forecasted period, demand should reach nearly 3.2 million units. In other words, this segment will likely continue expanding stratospherically. Therefore, it might pay for investors to consider the below autonomous vehicles stocks to buy.
Alphabet (GOOG, GOOGL)
Although best known for its domination of internet search and overall digital utility via its Google ecosystem, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) more than handles its own in terms of innovative solutions. In particular, Alphabet invested considerable funds into autonomous vehicles via its Waymo self-driving car project.
According to a UBS analyst, Waymo will own 60% of the self-driving market by 2030. Under this framework, in total, the autonomous mobility sector may reach a valuation of up to $2.8 trillion. If so, Alphabet may be able to achieve a somewhat similar dominance to what it delivered with Google search.
Financially, GOOG presents an attractive proposition for autonomous vehicles stocks to buy. According to Gurufocus.com, GOOG rates as significantly undervalued based on its discounted cash flow (DCF) analysis. Specifically, the investment resource calculates the fair value at $156.60 with a margin of safety of 38%. Turning to Wall Street, Alphabet enjoys a unanimous strong buy assessment. With a more than 28% upside potential, GOOG easily ranks among the top autonomous vehicles stocks.
Garnering popularity for its graphics processing units (GPUs), Nvidia (NASDAQ:NVDA) dominates several segments of the tech hardware space. Over the years, the company has taken a significant interest in autonomous mobility. Through its AI and machine learning developments, Nvidia demonstrates that true self-driving technology may only be a few years away.
Specifically, Nvidia works on several initiatives, including DRIVE Concierge, which enables autonomous mobility along with providing a digital assistant platform. As well, it works on advanced software to imbue its platform with real-time AI inference.
Another factor bolstering the case for NVDA centers on its financials. For starters, the company commands a strong balance sheet, evidenced by its Altman Z-Score of 19.74, which reflects extremely low bankruptcy risk. Also, it features double-digit revenue growth and net margins, providing confidence for prospective investors. Finally, Wall Street analysts peg NVDA as a consensus moderate buy. For a decently reliable take on autonomous vehicles stocks, NVDA deserves consideration.
While Tesla (NASDAQ:TSLA) hangs most of its reputation on effectively pioneering electric vehicles in the modern era, it’s also a significant player among autonomous vehicles stocks. According to the company’s website, “Tesla cars come standard with advanced hardware capable of providing Autopilot features, and full self-driving capabilities—through software updates designed to improve functionality over time.”
Personally, I was skeptical about any kind of self-driving protocol. However, a friend of mine let me drive his Tesla and I must say that I’m incredibly impressed with the integrated AI. Admittedly, I’m not sure if I trust a machine completely with my life. Nevertheless, the tech is astounding.
Further, speculators may be eyeballing TSLA for its relative discount. While shares nearly doubled so far this year, in the past 365 days, TSLA gave up more than 30% of equity value. As well, its financials look attractive. Not surprisingly, it features bonkers revenue growth and an outstanding trailing-year net margin of 15.45%. Currently, Wall Street analysts peg TSLA as a consensus moderate buy. For proven capabilities, investors should consider TSLA as one of the promising autonomous vehicles stocks.
General Motors (GM)
Once a struggling brand following the disaster of the Great Recession, General Motors (NYSE:GM) now stands as one of the most promising automakers. Better yet, it’s made significant inroads as a candidate for top-tier autonomous vehicles stocks.
Per its website, GM not only pivoted strongly to the electrification of mobility, it also invested heavily in autonomous mobility solutions. The stated purpose of this initiative is to promote better accessibility, safer roads and less traffic.
As I’ve stated before, a particularly attractive element about GM is that it doesn’t ignore its customers’ desires. Therefore, while it works to electrify its most iconic brands – such as the Hummer – it hasn’t given up on its combustion-powered heritage. Indeed, the eighth-generation Corvette confirms that GM will still give automotive enthusiasts a reason to cheer. Financially, presents an enticing profile. At the moment, the market prices shares at a forward multiple of 7. As a discount to earnings, General Motors ranks better than nearly 79% of the competition. Also, analysts peg GM as a consensus moderate buy, with a price target implying nearly 14% upside potential.
For the next three autonomous vehicles stocks, we’re going to discuss the most speculative market ideas, beginning with MicroVision (NASDAQ:MVIS). A technology firm specializing in laser scanning, its innovations carry applications for projection, 3D sensing, and image capture. The company enjoys organic relevancies in light detection and ranging (lidar) systems, which enable self-driving cars to “visualize” their environment.
According to its website, MicroVision’s lidar system benefits from the key advantages of a dynamic field of view (enabling object targeting at short and long ranges simultaneously) and the accurate detection of smaller objects from longer distances. As well, the system features low latency for improved reaction times and lower costs.
To be fair, what’s not an advantage is the company’s poor financials. Other than its balance sheet – which admittedly features a strong cash balance relative to debt – the fiscal stats ping poorly. We’re talking negative growth on a per-share basis and profit margins well below breakeven. That said, speculators believe MVIS to be one of the promising autonomous vehicles stocks, with shares up 21% this year. I’ll let you decide if it’s worth the risk.
A lidar specialist, Ouster (NYSE:OUST) builds high-resolution, digital 3D lidar sensors for use in various platforms. They include autonomous vehicles, industrial, robotics, drones, mapping, defense, and security systems. Further, its sensors produce images from ambient infrared, with software that enables a vehicle’s sensing and mapping functions.
Recently, Ouster generated massive headlines when it completed its acquisition of Velodyne, with management calling it a “merger of equals.” Effectively, the combined entities now form a lidar powerhouse. Per CNBC, the deal will see the enterprise command “…more than 850 current customers, a deep portfolio of patents, and about $315 million in cash on hand, based on year-end figures.”
To be sure, the cash will be critical. As with MicroVision above, Ouster remains a deeply unprofitable enterprise. In addition, forward motion will likely require intense capitalization, making a robust war chest incredibly vital. Currently, Wall Street has a narrow consensus view of a moderate buy for OUST. Analysts’ average price target stands at $1.70, implying an 11% growth potential.
Innoviz Technologies (INVZ)
Rounding out this list of autonomous vehicles stocks is Innoviz Technologies (NASDAQ:INVZ). Based in Israel, Innoviz acts as a supplier of high-performance lidar semiconductor sensors and perception software that provide vision solutions for various sectors. These include automotive, drones, robotics, and mapping among others.
One of the main advantages that Innoviz carries is its latest-generation InnovizTwo lidar system. According to its website, the InnovizTwo performs 30 times better than previous-generation lidar systems. In addition, the cost sits 70% cheaper, dramatically improving accessibility to the game-changing invention.
Coincidence or not, INVZ has performed very well compared to speculative autonomous vehicles stocks. Yes, it’s up double digits on a year-to-date basis. However, it also gained more than 10% in the trailing year. That’s something to keep in mind if you want to go contrarian. Finally, Wall Street took a liking to INVZ, pegging it a consensus moderate buy. As well, analysts forecast a price target of $12.50, implying an upside potential of 171.74%.
On the date of publication, Josh Enomoto 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.
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