Some of the biggest stocks to ride auto industry trends are developing the “software defined vehicle,” or SDV. In other words, within a few years, many if not most new vehicles are going to be run and managed completely through software. Many firms that sell products related to the computerized components within vehicles will benefit a great deal from this trend.
Importantly, SDVs will be as updatable as your smartphone. Of course, that development will make it far easier to repair and upgrade vehicles. As a result, exciting, new features, including will be added to vehicles. Of course, autonomy itself is another huge development in the auto sector. Here are three stocks to ride auto industry trends.
BlackBerry (BB)
Two of BlackBerry’s (NYSE:BB) products will become instrumental components of hundreds of millions of SDVs. The firm’s QNX is “an embedded real-time operating system that can form a solid foundation for an SDV Platform.” BB defines an SDV Platform as software that allow drivers to interface with a vehicle’s software. QNX is a highly secure operating system that’s already utilized by about 235 million vehicles globally.
The firm’s IVY platform, which can be accessed through the cloud, obtains data from vehicles and allows developers and automakers to easily offer apps to drivers.
BlackBerry’s impressive, deep partnerships with many automakers, including Ford (NYSE:F), Stellantis (NYSE:STLA), and China’s Foxconn, should enable BB to benefit tremendously from the SDV Revolution.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) is poised to exploit SDVs with Drive Thor, its upcoming chip for automobiles. Thor will power both “autonomous driving and cockpit function,” including infotainment and AI.
Among the firms which have already agreed to integrate Thor are two large Chinese electric-vehicle makers: BYD (NASDAQ:BYDDF) and Xpeng (NASDAQ:XPEV). And among the automakers already using Nvidia’s chips in their vehicles are Mercedes-Benz (OTCMKTS:MBGYY), Volvo and Lucid (NASDAQ:LCID).
Also noteworthy is that Nvidia’s sales from the auto sector jumped 21% last year to $1.1 billion. The company reports that nearly every firm working on auto-based AI uses its products. As autonomous driving and SDVs proliferate, the growth of Nvidia’s auto revenue should accelerate tremendously.
Aptiv (APTV)
Last year, Aptiv (NYSE:APTV), which provides high tech auto components, launched an R&D center in India focused on developing and delivering products and software-enabled solutions. At launch, the center had more than 2,000 employees, and the firm expected that number to grow significantly over the longer term.
The firm clearly anticipates that the center’s innovations, along with the proliferation of SDVs, will enable it to grow a great deal over the long term, as it is targeting revenue of $40 billion in its fiscal 2030, up from $20 billion last year.
Aptiv is also well-positioned to benefit from the electrification and autonomous trends within the auto sector. Despite these strong, positive catalysts, APTV has a low forward price-earnings ratio of 13.9 times.
On the date of publication, Larry Ramer held long positions in BB and XPEV. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
