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), Netflix (NFLX) and Tesla (TSLA) 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. A few months ago, however, Tesla stock might not have made this list. Shares of TSLA had a rough start to the year, spiraling downward from a high of 365 in December to a low of 185 in late May. Was TSLA stock cooked after years of monster returns? Many Wall Street pundits were declaring its demise.
Not so fast! Just look at what’s happened in the last two months.
Now at 255 and trading well above its 50-day moving average, Tesla stock is humming again. Second-quarter earnings are due out today (July 24), which could either advance the rally or throw the brakes on it. Regardless, there are a lot of reasons to like Tesla’s long-term potential. 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 those reasons. 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 were down 15% in 2017 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 2019 and 2020, when not only automakers but also ride-hailing companies like Uber debut cars or capabilities that use Nvidia’s chips.
As for the stock, it experienced a downturn similar to TSLA’s, but has bounced back with equally similar verve in the last two months:
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; its products are due to hit the market later this year, thanks to partnerships with Intel (INTC), Mobileye and Lyft.
To prime the self-driving pump, so to speak, last year the company announced plans to launch 30 autonomous vehicles in Las Vegas on the Lyft app. The company said the resulting data “will allow us to further refine our autonomous driving capabilities and strengthen our portfolio of industry-leading active safety solutions.”
As for the stock, it’s up 34% this year despite a big gap down in April and May, bouncing back sharply in June and setting up nicely in July.
Back above its 50- and 200-day moving averages, you could nibble on dips. 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- and short-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 the future returns.
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.