Self-Driving Cars are Coming. And these Three Companies Stand to Benefit.
Autonomous driving technology is still more rumor than reality. We’re years from seeing driverless cars on the roads with any real frequency. But when the self-driving car dam does break, the automakers, suppliers and tech companies shelling out billions on research and development in the autonomous driving space will be flooded with revenues. When it happens, you’ll want to own self-driving car stocks.
But the best way to invest in stocks is to get in early on a trend before it’s too late. And while autonomous driving technology is certainly a hot trend on Wall Street now, it’s not nearly what it will be when we start seeing actual self-driving cars on the roads in a few years. Economists estimate that autonomous driving technology could become a $556 billion industry by 2026. Investing in a revolutionary idea, product or company before it strikes gold is why early investors in Apple (AAPL), Amazon (AMZN), Google (GOOG) and Netflix (NFLX) are all retired and living on yachts right now.
Self-driving cars are the latest revolutionary technology. Thus, investing in self-driving car stocks now could make you a very rich person five, 10 or 15 years from now.
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That said, we don’t like to try and predict the future here at Cabot Wealth Network. We like to recommend stocks that already have good-looking charts with plenty of momentum. So, here are three self-driving car stocks that have the right combination of a good chart and a strong foothold in the driverless car industry.
3 Self-Driving Car Stocks
Self-Driving Car Stock #1: Tesla (TSLA)
Inventors of the luxury electric car for long-distance driving, Tesla is also leading the charge in autonomous driving. Two years ago, however, Tesla stock might not have made this list, as shares of TSLA had a very rough first half of 2019. Many Wall Street pundits were declaring its demise.
Boy were they wrong! Just look at what’s happened in the last 12 months alone.
That’s an 86% gain – and that includes a 300-point drop this February and March. The stock has since stabilized, and the long-term trajectory remains decidedly up. And its semi-autonomous driving system, Autopilot—which could soon allow drivers to literally fall asleep at the wheel while “driving” their cars, according to CEO Elon Musk—is among the many reasons why. It may take longer than Musk expected, but eventually, Tesla will be a big part of the self-driving-car story.
Self-Driving Car Stock #2: Nvidia (NVDA)
Nvidia is best known for the chips it makes for the gaming industry and cryptocurrency. But it also makes system-on-a-chip (SoC) units for the automotive market. Its autonomous driving revenues lost some steam as the company transitioned from infotainment system chips in self-driving cars to artificial intelligence cockpit systems. But the company expects huge growth in its driverless car wing in 2021 and beyond, when not only automakers but also ride-hailing companies debut cars or capabilities that use Nvidia’s chips.
As for the stock, it’s trending quite well, up 48% in the last year, and has been on fire the last five months, streaking to new all-time highs in September before cooling off this month:
You could buy on the current dip in preparation for the next leg up. But this is a great long-term stock to own regardless of when you buy.
Self-Driving Car Stock #3: Aptiv (APTV)
Spun off from Delphi Automotive in late 2017, Aptiv develops hardware and software designed specifically for driverless car technologies. Its Centralized Sensing Localization Planning (CSLP) platform gives cars semi-autonomous capabilities by using cameras and other artificial intelligence; last year, the company unveiled its new Smart Vehicle Architecture (SVA), a cloud-based setup that makes driverless vehicles easier to assemble.
As for the stock, after seriously stubbing its toe during the February and March 2020 coronavirus crash, it’s been trending upward ever since, up 59% in the last year, and trading well above its 50- and 200-day moving averages.
You could nibble here or or on the next dip. Regardless of when you buy, APTV is undoubtedly a pure play on the self-driving car industry with a solid long-term trajectory.
The long-term patterns in all three of these self-driving car stocks are up. But thanks to the immense potential of the driverless car industry, the recent gains could pale in comparison to their returns over the next five to 10 years.
Do you own any self-driving car stocks in your portfolio?
Investment analyst and Chief Analyst of Cabot Wealth Daily, Chris Preston brings you all the latest from the investing world. Sign up to get updates and breaking news delivered FREE to your inbox. Get unlimited access to our library of complimentary investing reports.Sign up now!
*This post has been updated from an original version, published in 2018.