With self-driving autos likely to become the next big trend, investors may want to keep an eye on the best autonomous driving stocks. For one, as noted by Investorplace contributor Josh Enomoto, research firm Mordor Intelligence says the self-driving market would be worth $33.48 billion in 2023 and grow at a compound annual rate of 22.25% in the next five years. From there, eventually, the market could be worth as much as $93.3 billion by 2028. Even better, autonomous-driving technology could soon be used in robotaxis, and in autos for product delivery. With all of that said, here are the seven best autonomous driving stocks to buy now.
Aurora Innovation (AUR)
A concept image of an autonomous semi-truck on a road
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Aurora Innovation’s (NASDAQ:AUR) software, which enables autonomous truck driving is being tested by multiple transportation companies in Texas, including FedEx (NYSE:FDX), Uber (NYSE:UBER), and Schneider. In addition, the company estimates that as of June 30, it completed about 65% of the milestones it needs to complete before launching its self-driving subscription services. Plus, Aurora believes that it now has sufficient funds to operate until it launches its subscription service in 2025.
Aptiv (APTV)
An Aptiv (APTV) office building in Poland.
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Auto-components maker Aptiv (NYSE:APTV) operates an autonomous driving joint venture, called Motional, along with Hyundai (OTCMKTS:HYMTF).
Last December, Motional’s autonomous vehicles, along with “safety drivers” were deployed on Uber’s network in Las Vegas. Now, over the next decade, Motional and Uber anticipate that they will “create one of the largest deployments of AVs on a major ride-hail network, with the potential to reach millions of Uber riders.” Also noteworthy is that Motional has made a similar deal with Uber’s rival, Lyft (NASDAQ:LYFT), with Motional launching a robotaxi service with the ridesharing company in Los Angeles. The company is benefiting from the proliferation of both advanced driver assistance systems and electric vehicles.
Mobileye (MBLY)
Transdev Mobileye (MBLY) autonomous driving shuttle bus showcased at the IAA Mobility 2021 motor show in Munich, Germany
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Mobileye (NASDAQ:MBLY) develops systems that enable advanced driver assistance systems (ADAQ) and semi-autonomous driving. The company has a nearly 70% share of the total ADAS market. However, it does have formidable competitors, including Aptiv, Nvidia (NASDAQ:NVDA) and Qualcomm (NASDAQ:QCOM). In addition, analysts, on average, only expect Mobileye’s revenue to climb 12% this year, while the mean estimate calls for its earnings per share to drop to 70 cents from 79 cents.
Nonetheless, I expect the company’s performance to greatly improve over the longer term as its products become cheaper and as ADAS, semi-autonomous, and autonomous features become more prevalent in automobiles globally. Additionally, I believe that, after MBLY was spun off from Intel (NASDAQ:INTC) earlier this year, MBLY’s management is likely much more incentivized to improve the company’s financial performance than previously.
Baidu (BIDU)
Laptop computer displaying logo of Baidu (BIDU), a Chinese multinational technology company specializing in Internet-related services and products
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Baidu (NASDAQ:BIDU), a Chinese tech giant, is currently operating driverless robotaxis in more than ten Chinese cities. By the end of this year, it also has plans to put an additional 200 fully autonomous driving robotaxis into operation nationwide. By 2025, BIDU intends to have autonomous robotaxis deployed in 65 cities, and it eventually plans to operate “tens of thousands of autonomous vehicles across China.” From here, I believe that BIDU will generate respectable profits from robotaxis within three or four years from now. As of the end of last quarter, the tech giant’s driverless taxis had already provided an impressive 3.3 million rides to consumers, the company reported.
Uber (UBER)
The Uber logo is displayed on a smartphone on top of a map background.
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With its multiple, strong partnerships in the autonomous-driving partnerships, Uber has clearly left itself very well-positioned to benefit a great deal from the proliferation of driverless vehicles. As I noted in previous sections of this column, Uber is partnering with Motional on driverless taxis and testing Aurora Innovation’s system that enables driverless trucks. Moreover, Uber has started utilizingAlphabet’s (NASDAQ:GOOG,NASDAQ:GOOGL) driverless cars in Phoenix.
Over the longer term, as these alliances expand tremendously, they will prove to be tremendously profitable for Uber. After all, paying drivers is certainly by far Uber’s largest expense in the ridesharing space, as 75% of the amount that passengers pay currently go to drivers. Likewise, I’m sure that its truck drivers’ compensation is by far the largest expense of its shipping business. As a result of these points, it’s clear that widely deploying robotaxis would cause Uber’s top and bottom line to skyrocket.
General Motors (GM)
Image of General Motors (GM) logo on corporate building with clear sky in the background.
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General Motors’ (NYSE:GM) backed-Cruise is seeking approval from Washington “to deploy up to 2,500 self-driving vehicles annually without human controls,” Reuters reported last month. Additionally, these vehicles will not have steering wheels or mirrors, showing that they will definitely all be fully autonomous. Suggesting that Cruise could really move the needle both for GM and the other companies on this list, GM CEO Mary Barra has said that Cruise could generate $50 billion of revenue annually for the company. Cruise’s huge potential clearly makes GM one of the best autonomous driving stocks to buy now.
Xpeng (XPEV)
Xpeng (XPEV) car logo in Shanghai International Automobile Industry Exhibition
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As I reported in a previous column, Chinese electric-vehicle maker Xpeng (NASDAQ:XPEV), which appears to be multiple steps ahead of its competitors when it comes to autonomous driving, has launched a partnership ” with Chinese ride-sharing giant DiDi Global (OTCMKTS:DIDIY). While the media has focused on the companies’ intention to collaborate on developing low-cost EVs, they also noted that they intend to partner on robotaxis.
The combination of Xpeng’s advanced autonomous technology, which is already being tested for use in robotaxis, and Didi’s huge customer base should generate gigantic profits for Xpeng in the longer term. Moreover, it is believed that the $20,000 EV which Xpeng plans to launch in partnership with Didi next year will have autonomous-driving capabilities. I believe that the EV will become very popular in China and in many other countries.
On the date of publication, Larry Ramer’s held long positions in AUR and XPEV. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.
