The long-term potential of stocks pertaining to autonomous driving makes them appealing. By 2024, there may be more than 54 million cars on the road with some sort of self-driving tech installed. The market is thus expected to grow from $24 billion in 2021 to $62 billion in 2026.

Positive regulatory action is also contributing to the success of autonomous driving stocks in a number of locations. By altering its standards, the US National Highway Traffic Safety Administration made AV testing and deployment simpler. There are sizable AV testing and operation infrastructures for public roads in both California and Arizona.​

Furthermore, tax advantages and subsidies for research and development are provided by the Chinese government to companies in the AV ecosystem. For supervised testing, there are sizable AV testing areas in Beijing, Shanghai, and Shenzhen.

Meanwhile, 50,000 Los Angeles consumers on a waitlist may take advantage of complimentary robotaxi trips from Waymo. While Wayve uses artificial intelligence and machine learning to enhance car navigation and decision-making, Amazon’s (NASDAQ:AMZN) Zoox is using robotics to drive its robotaxis further, quicker, and at night in Las Vegas.

The $62 billion market, favorable legislative tailwinds, and the participation of major corporations like as Amazon make autonomous driving stocks a solid investment throughout the year. To be safe, however, stick to undervalued plays—those with the most potential.

Top Autonomous Driving Stocks: Mobileye Global (MBLY)

Mobileye Global (NASDAQ:MBLY), spun out from Intel (NASDAQ:INTC), is one of the top autonomous driving stocks trading at an attractive valuation, down 37% this year, as investors price in higher inventories and a sharp drop in sales in its latest quarter. But a comeback is on the cards for MBLY, which controls a 70% market share in the advanced driver assistance systems sector; analysts hold a ‘strong buy’ consensus on the stock and a target price of $38, translating into around 46% upside.

The EyeQ6 Lite system-on-chip from Mobileye powers advanced driver-assistance systems (ADAS) in numerous car models coming this year, improving performance and safety while saving money. High-compute density accelerators and improved pixel segmentation improve emergency braking, lane-keeping, and automatic cruise control.​

Volkswagen Group and Mobileye are also partnering to develop and employ driver assistance and self-driving vehicle technology. This agreement enhances Level 2 and 3 driving features, improving driving safety across Volkswagen’s Porsche, Audi, Bentley, and Lamborghini brands. Volkswagen’s totally electric ID will use Mobileye’s technology. Buzz automobiles for transportation and mobility.

Baidu (BIDU)

Baidu’s (NASDAQ:BIDU) Apollo RT6 is a self-driving electric car meant to work with robotaxi services. The RT6 is a fully electric car with a driving wheel that can be taken off to make room for more people or extra features like televisions, vending machines, or video game systems. The car has advanced technology, including 1,200 TOPS of computer power and a complex sensor design with 38 sensors: it can drive itself at Level 4 and has automatic parking features, and boasts 8 LiDARs, 6 millimeter-wave radars, 12 ultrasonic radars, and 12 cameras.

BIDU is the first company in China to gain permission to run fully driverless robotaxi services. Baidu’s Apollo Go cars can drive without a safety driver during the day in certain areas of Wuhan and Chongqing, thanks to the permits. Baidu wants to use thousands of self-driving cars and cut the price of robotaxi rides by a substantial margin, with the goal of making them half the price of regular cabs.

Since 2020, Baidu’s Apollo Go robotaxi service has served over a million individuals; it wants to serve 100 cities by 2030, up from 65 currently. In the next years, Baidu will use Apollo RT6 automobiles extensively. A sprawling conglomerate, BIDU doesn’t need to rely on its autonomous driving segment to fuel its business line; it’s the other way around; analysts rate it a ‘strong buy’, forecasting a potential upside of 67%.

Luminar Technologies (LAZR)

Luminar Technologies (NASDAQ:LAZR) accomplished a significant manufacturing milestone in April when it started producing automobiles for Volvo Cars worldwide, marking the first step toward using Luminar’s lidar technology in consumer vehicles.

In addition, LAZR is also working with Applied Intuition to expedite ADAS and autonomous driving research. This cooperation uses Applied Intuition’s modelling and software tools to improve Luminar’s lidar-based technologies for automakers’ robust and efficient development processes.

Luminar Technologies also narrowed its losses in Q1 2024 versus Q1 2023, losing $0.30 per share instead of $0.40 per share, while also highlighting its relationship with Gatik for multi-year production deals.

But Luminar’s decision to lay off 20% of its staff and move toward contract manufacturing to become asset-light somewhat balances the bullish theory. Plus, LAZR’s ‘hold’ consensus and BofA Securities‘ downgrading indicate cooling analyst love right now, but ignoring the 236% upside potential in LAZR stock is unwise, particularly given the importance of its vision-based lidar technology among autonomous driving stocks.

On the date of publication, Faizan Farooque 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.