Major automakers are betting billions on autonomous driving and investors are betting on autonomous vehicle stocks.
In fact, investments in this industry are up to $100 billion, according to IB Times’ contributor Dawn Geske.
- Volkswagen (OTCMKTS:VWAGY) has invested up to $54.2 billion.
- Samsung has reportedly spent up to $8 billion on driverless technology.
- Ford (NYSE:F) has spent nearly $5.4 billion.
- Toyota (NYSE:TM) is up to $4.32 billion.
- Daimler (OTCMKTS:DMLRY) was up to $3.04 billion.
- Honda (NYSE:HMC) is up to $2.76 billion.
Tesla (NASDAQ:TSLA) will launch its next-gen full self-driving beta test on Oct. 20.
Professor Mark Levine and assistant professor Libbi Levine Segev of the University of Denver’s Daniels College of Business wrote in an email to InvestorPlace, “More and more companies, …from very large to small companies, are in this multi-billion dollar field.”
With billions flowing into the sector, it’s well worth the investment.
Autonomous cars must overcome issues with machine learning, or how such technology should be “trained, tested, or validated.” We need to know how these cars would operate, if they will be socially accepted and if regulations allow them on the road, as I noted in August 2020.
Or as Levine and Segev wrote, “Some of the entities that are in the DV [driverless vehicle] field are AI companies; some are hi tech companies; some deal with design; many deal with testing of DV. There are many aspects to the DV field.”
Despite the obstacles, there are also rewarding opportunities in these top stocks:
Autonomous Vehicle Stocks: Aptiv (APTV)
Aptiv is in a joint venture with Hyundai (OTCMKTS:HYMTF) with plans to test fully driverless cars later this year. They also said they’d have a production-ready autonomous driving platform for robotaxi providers and fleet operators by 2022.
The joint venture between Aptiv and Hyundai is called Motional.
“Motional, in all of its previous forms, has been leading driverless technology for decades. Our DNA – a combination of Aptiv’s expertise in advanced technology and Hyundai’s leadership in both vehicle manufacturing and R&D – is uniquely powerful, and positions us to fundamentally change how people move through their lives,” Karl Iagnemma, president and CEO of Motional, said in a recent statement.
One example of support for autonomous vehicle stocks: Morgan Stanley analyst Adam Jonas recently raised his price target on APTV stock to $150 from $63 with an “overweight” rating.
Alphabet autonomous vehicle offshoot Waymo just launched driverless taxis in the suburbs of Phoenix. While the company plans to have safety backup drivers as it expands the service, right now rides will be 100% driverless.
Along the way, the Waymo team has had to predict the trajectory of moving objects.
In fact, as noted in its research paper, TNT: Target-Driven Trajectory Prediction, as highlighted by Medium contributor Dave Gershgorn, it’s essential to have “an accurate understanding of where the other vehicles and pedestrians will be in the future, in order for an autonomous vehicle to take safe and effective actions.”
Waymo also had to focus on a vehicle’s identification of pedestrians and cars in crowded environments, as highlighted in SoDA: Multi-Object Tracking with Soft Data Association.
NXP Semiconductors (NXPI)
Nearly 44% of the company’s business will go to cars, says Barron’s contributor Al Root.
Part of that business is autonomous driving, where NXP’s advanced driver assistance system comes into play. It’ll help with radar, vision and safe central computing. Thus, the company is on the list of autonomous vehicle stocks to watch. Deutsche Bank analyst Ross Seymore recently increased NXP’s sales and earnings targets to EPS of $1.18 on sales of $2.1 billion. Morgan Stanley analyst Craig Hettenbach raised his price target on NXPI stock to $147 from $122.
Even more impressive, the company recently said third-quarter results would be above prior guidance. In fact, it believes sales will come in at $2.267 billion, as compared to previous guidance of $2 billion. Non-GAAP operating income of $586 million is expected, topping prior guidance of $444 million.
“The business environment has improved at a faster than anticipated pace, driving a broad-based increase in revenue, which also enabled higher gross margin. Given the improved outlook, we increased operating expenses in relation to non-executive variable incentive compensation, which taken together, resulted in operating profit margin substantially above guidance,” said Kurt Sievers, NXP president and CEO.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Ian Cooper, an InvestorPlace.com contributor, has been analyzing stocks and options for web-based advisories since 1999.