Full-blown autonomous driving won’t be here tomorrow, but it’s certainly on the way. The technology has drawn mixed emotions from consumers. Some don’t trust it and aren’t excited for a computer to navigate the vehicle that they’re in. Others are embracing the technology and can’t wait for it to happen. That’s one reason they’re looking for self-driving car stocks.
For all the doubters out there though, please realize this technology is coming. I know this for two reasons: that it will save lives and save money. Almost 40,000 people die in the United States each year due to automotive accidents, an unacceptable level of fatalities. My hope is that one day we look back and say we can’t believe how high that number used to be.
Ultimately, self-driving cars will cut that number down. It’s why we have hundreds of companies collectively pouring billions of dollars into the solution. It will increase productivity, improve safety and decrease logistics costs. Simply put, it would be crazy to ignore this opportunity.
With that said, let’s examine some autonomous car stocks.
Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) should be considered the leader of the self-driving car movement. It’s the first major company that devoted major dollars to establishing a program for an autonomous fleet and it’s no surprise that it’s still the leader a decade later.
After launching its own segment, Waymo, the company has seen the unit’s valuation soar. More than one analyst has pegged its valuation at more than $100 billion. Morgan Stanley analysts hold the top valuation mark for now, saying Waymo could be valued at up to $175 billion.
It operates the only commercial autonomous vehicle program in the country and has plans to expand globally. Waymo is also eyeing the semi truck market for its autonomous vehicle services and licensing to automakers isn’t out of the question down the road.
Simply put, this company is leading the pack. If you want exposure to just one company with a rock-solid balance sheet and exposure to self-driving car stocks, GOOGL is the pick.
General Motors (GM)
Widely considered in second place for autonomous driving commercial services in the U.S. is Cruise, a subsidiary of General Motors (NYSE:GM).
GM acquired Cruise for roughly $1 billion in August 2016. Following investments from SoftBank and Honda (NYSE:HMC) in 2018 though, the valuation has soared all the way up to $14.6 billion. Talk about a return on investment. GM CEO Mary Barra has proven she can lead an innovative team while also making savvy acquisitions when needed.
Cruise gives GM a viable commercial autonomous taxi option for the future, while the company’s own self-driving technologies — like Super Cruise in its Cadillac line — have proven to be an industry leader as well. GM is among those fighting for a spot at the top when it comes to autonomous driving and that shouldn’t come as a surprise.
Just when everyone wants to dump the automaker, it comes out with strong guidance for the quarter and for fiscal 2019. Then it tops Q4 estimates and reiterates guidance. The valuation is low with a single-digit P/E ratio and the dividend is high with a 4% yield. This one will surely be in focus if it sees a large pullback this year.
Unlike GM, which has been on fire, Nvidia (NASDAQ:NVDA) has been anything but. After making its name in gaming and computer chips for years, Nvidia quickly found itself in the dog house, falling ~50% in the fourth quarter. What a brutal beating for investors.
However, it gave investors — particularly those looking for self-driving car stocks — an opportunity to invest in a long-term theme on the cheap. Despite the drumming Nvidia has received following its inventory-related issues, there’s no denying its position among the autonomous driving leaderboard.
Unlike GM and Waymo though, Nvidia does not have its own autonomous taxi service. Instead, it’s building hardware and software solutions for hundreds of customers focused on self-driving cars. Put simply, it requires a mind-boggling amount of input and power to operate a self-driving vehicle. Whether it’s an automaker, research team or startup, many of these companies are leaning on Nvidia as the backbone to their self-driving aspirations.
As such, Daimler (OTCMKTS:DDAIF), maker of Mercedes-Benz, has partnered with Nvidia for its autonomous driving and self-driving taxi ambitions. Look for automotive revenue to continue increasing for the foreseeable future for Nvidia.
Like Nvidia, Intel (NASDAQ:INTC) is not building its own autonomous driving platform. However, the company is working on components that will help other companies build its own self-driving systems.
Various chips are on the way and Intel’s $15.3 billion acquisition of Mobileye is helping lead its charge. The company made the costly acquisition in order to bolster its portfolio in the automotive segment and give itself a chance in the self-driving car race.
While Intel may not get much of the spotlight, it is worth mentioning the company’s advances. During the Autonomous Vehicles 2018 conference in Detroit, MI. In August, I witnessed the company’s breakdown of its Responsibility-Sensitive Safety program (RSS). Acting as a reactionary system for autonomous driving, it helps improve safety and mitigate risk. It’s not perfect, but it was an impressive program to watch at work.
Intel also has deals in the pipeline. In 2018, Intel agreed that it will supply its relatively new EyeQ5 chip in 8 million vehicles for a so-far unnamed European automaker. The deal won’t begin until 2021 and while the terms weren’t disclosed, 8 million cars is a lot of vehicles. Consider that U.S. consumers buy about 17 million new models per year.
In other words, Intel has a future in the autonomous driving space, no question about it.
This list doesn’t have to be five stocks long — it could be 25 without an issue. There are so many companies involved, many don’t even realize it. There’s cloud and data companies, automakers, semiconductor manufacturers, OEM suppliers, chip makers and a long list of others that are involved.
That said, we could have listed Tesla (NASDAQ:TSLA), Baidu (NASDAQ:BIDU) for its Apollo driving program, NXP Semiconductor (NASDAQ:NXPI) and a whole host of others. But let’s talks about BlackBerry (NYSE:BB) because it doesn’t get much love when talking about self-driving car stocks.
BlackBerry is a software and security play. After talking up Jarvis at last year’s Detroit Auto Show (in 2018), the discussion has admittedly faded somewhat. However, BlackBerry is already in tens of millions of vehicles and partnered with some of the largest automakers in the world. When — not if — autonomous driving hits its stride, security will be one of the top concerns for automakers.
With BlackBerry having an excellent reputation in this regard, it will be (and to some extent, already is) a go-to pick in automotive software security. Autonomous vehicles are essentially computers on wheels and that’s a big deal for a company like BlackBerry.