In this article, we will take a look at the 10 Best Autonomous Driving Stocks To Buy According to Hedge Funds.
The vision of fleets of driverless cars seamlessly transporting passengers has captivated consumers and driven billions in investment over recent years. Imagine summoning a driverless car with a tap on your phone, enjoying a stress-free, congestion-free commute. After years of anticipation and extensive development, self-driving car technology is finally becoming a reality. Vehicles equipped with advanced driver-assist systems (ADAS) and partial self-driving capabilities are now hitting the market, signaling the start of the race toward full autonomy.
Simultaneously, the robotaxi market is maturing, with commercial driverless services now active across the U.S. and China. Leading players in this space collectively operate over 2,000 robotaxis, gathering data to refine AI systems, ensuring safety, and serving mobility-as-a-service customers. According to IDTechEx, the autonomous vehicles market is poised for rapid growth, with projections indicating robotaxi vehicle sales could reach $174 billion by 2045, representing a compound annual growth rate (CAGR) of 37% starting in 2025.
According to a 2021 McKinsey survey, consumers are eager for autonomous driving (AD) features and willing to pay a premium. Ranked from Level 0-5 based on capabilities, growing demand for these systems could unlock billions in revenue. While vehicles equipped with Level 2 autonomy are widely known, the firm projects that widespread adoption of vehicles equipped with Level 4 capabilities will begin around 2026, with initial applications expected to focus on autonomous parking, with highway driving following shortly thereafter. Overall, McKinsey projects that the ADAS and AD market for passenger cars could generate $300 billion to $400 billion by 2035. The firm also highlights the far-reaching impact autonomous vehicles could have on various industries. For instance, by significantly reducing car accidents, advanced driver technology could lower the demand for roadside assistance and vehicle repairs, potentially challenging businesses in those sectors as adoption increases. Additionally, self-driving cars may eliminate the need for high insurance premiums, as liability for accidents could shift away from individual drivers. This could pave the way for new business-to-business insurance models tailored to autonomous travel.
Adding momentum, Bloomberg reports that President-elect Donald Trump’s transition team plans to prioritize a federal framework for self-driving vehicles within the Transportation Department. Currently, the National Highway Traffic Safety Administration (NHTSA) permits manufacturers to deploy 2,500 self-driving vehicles annually under exemptions. However, broader adoption of autonomous vehicles will likely require congressional action to establish comprehensive guidelines. Grayson Brulte, founder of The Road to Autonomy, a data and analysis firm specializing in self-driving technology, remarked:
“The companies want clarity on vehicles with no pedals and no steering wheel. There could be a fight over this, but if a federal framework is implemented, it could usher in the autonomy economy.”
Additionally, if new regulations permit the broader deployment of vehicles without human controls, it could significantly benefit Elon Musk. Musk, who has become an influential figure within the president-elect’s inner circle, has staked the EV maker’s future on self-driving technology and artificial intelligence. During his company’s recent quarterly earnings call, Musk expressed his intention to advocate for a streamlined federal approval process for autonomous vehicles, leveraging his position within the Trump administration to advance the regulatory framework for AV adoption.
With these details in mind, let’s take a look at the best autonomous driving stocks to buy according to hedge funds.
Our Methodology
In this article, we examined screeners and ETFs to identify leading companies actively engaged in the autonomous vehicle market. We ranked the top 10 stocks in ascending order based on hedge fund sentiment as of Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. Toyota Motor Corporation (NYSE:TM)
Number of Hedge Fund Holders: 18
Toyota Motor Corporation (NYSE:TM) is among the world’s largest automotive manufacturers, producing a wide range of vehicles, including hybrids, electric vehicles (EVs), and traditional internal combustion engine models. The company also earns revenue through financing and leasing services and is at the forefront of developing autonomous driving technologies such as its Chauffeur and Guardian systems.
Earlier in November, Toyota Motor Corporation (NYSE:TM) partnered with Nippon Telegraph and Telephone Corp. (NTT) to form a joint venture, committing ¥500 billion ($3.3 billion) by 2030 to advance artificial intelligence applications for autonomous driving. The initiative aims to create a “society with zero traffic accidents” by integrating mobility and telecommunications technologies. The companies plan to launch the project in Japan, with global deployment to follow. Central to the initiative is Toyota’s development of software-defined vehicles (SDVs), which prioritize safety and security. These vehicles require robust high-speed communication networks, AI for processing vast data, and advanced computing infrastructure. Leveraging NTT’s telecommunications expertise, the joint venture plans to launch a “Mobility AI Platform” in 2025 to connect people, vehicles, and infrastructure, with societal implementation expected within three years.
In its second quarter, Toyota Motor Corporation (NYSE:TM) reported mixed financial results. Sales reached ¥11.44 trillion ($76.29 billion), slightly exceeding analyst expectations of ¥11.41 trillion. Operating income stood at ¥1.15 trillion, but the quarter marked Toyota’s first profit decline in two years. Sales volumes dropped 20% year-over-year, with 2.3 million vehicles sold compared to 2.41 million in the same period last year. Additionally, Toyota Motor Corporation (NYSE:TM) revised its full-year vehicle production target to 10.85 million, down from 10.95 million.
9. Aurora Innovation (NASDAQ:AUR)
Number of Hedge Fund Holders: 22
Aurora Innovation (NASDAQ:AUR) is a self-driving technology company specializing in autonomous vehicle software for the transportation and logistics sectors. Its technology serves both passenger vehicles and commercial trucking, with partnerships involving leading automotive manufacturers. Aurora’s unique position as the only publicly traded company focused exclusively on Level 4 autonomous trucks places it in a distinctive niche.
On November 26, Wolfe Research initiated coverage of Aurora Innovation (NASDAQ:AUR) with a Peer Perform rating. The company’s stock, which debuted on NASDAQ in 2021 at $10 per share, has dropped 36% since its launch but has staged an impressive recovery. Shares have surged over 400% from their December 2022 lows and are currently up 61.66% year-to-date. A recent boost followed reports that the Trump administration may ease federal regulations for self-driving vehicles. Wolfe Research projects the company’s revenue to approach $1 billion by 2028 and exceed $3 billion by 2030, driven by an estimated deployment of 20,000 autonomous trucks, representing roughly 1% of the U.S. Class 8 truck market by the decade’s end.
Aurora CEO and Co-founder Chris Urmson shared plans in a letter to shareholders for the company’s driverless launch lane between Houston and the Dallas-Fort Worth area, set to begin operations in April 2025. He stated:
“We feel good about our progress and are confident in our ability to close the Safety Case for driverless operations on our launch lane. With additional visibility on the time needed to complete the aforementioned remaining validation, we now expect to launch commercially in April 2025.”
8. Stellantis N.V. (NYSE:STLA)
Number of Hedge Fund Holders: 24
Stellantis N.V. (NYSE:STLA) is a global automotive giant involved in designing, engineering, manufacturing, and distributing automobiles, light commercial vehicles, engines, and mobility services. The company has also ventured into autonomous driving, introducing its AutoDrive platform in 2021, and aims to become the first U.S. carmaker to offer Level 3 autonomous driving by 2025.
In July, the company unveiled a suite of new technologies set to redefine its vehicle lineup, all powered by artificial intelligence and poised to shape the future of its brands. Among these innovations are STLA Brain and STLA SmartCockpit, which first debuted with the Chrysler Airflow concept in 2022. However, the spotlight is now on STLA AutoDrive, a system promising Level 4 autonomy in the upcoming Halcyon concept. AutoDrive is set to begin its commercial rollout next year, replacing the current Hands-Free Active Driving Assist system and marking a major step forward in autonomous driving capabilities.
On the other hand, the company reported a significant decline in its third-quarter performance, with shipments falling 20% to 1.15 million units and revenues dropping 27% to €33 billion. CFO Doug Ostermann acknowledged these challenges, highlighting Stellantis’s focus on boosting profitability and adapting to market changes through a multi-year product transition plan. Stellantis N.V. (NYSE:STLA) also announced a strategic partnership with Leapmotor and collaboration with Infineon Technologies AG to enhance power conversion and distribution for electric vehicles.
On December 2, Stellantis N.V. (NYSE:STLA) shares were maintained with a Hold rating from HSBC following the unexpected resignation of CEO Carlos Tavares. Despite the leadership shift, the company reaffirmed its fiscal year 2024 financial guidance, initially released on October 31. The guidance projects an adjusted operating income margin between 5.5% and 7.0%, with HSBC estimating the lower end at 5.7%. The forecast for industrial free cash flow (FCF) ranges from negative €5 billion to €10 billion, with HSBC’s projection at approximately €8.5 billion.
Ariel Investments mentioned Stellantis N.V. (NYSE:STLA) in its Q2 2024 investor letter. Here is what the firm said:
“Finally, multinational automotive manufacturing company, Stellantis N.V. (STLA), fell in the quarter as higher interest rates in the U.S. and tapering demand for high-volume combustion engine models resulted in elevated U.S. inventory levels. Nonetheless, pricing outperformed expectations and management reiterated full-year guidance of double-digit adjusted operating profit margin and positive free cash flow. Although we expect discounting to increase as U.S. inventory ages, we maintain a constructive view on the company. We believe STLA’s strong global footprint and unwavering dedication to leading the industry in profitability, operational excellence, and strategic foresight will continue to enhance long-term shareholder value.”
7. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 36
Ford Motor Company (NYSE:F), a global automotive leader, produces a diverse lineup of commercial and luxury vehicles under the Ford and Lincoln brands. As part of its commitment to the future of transportation, in 2023, the automaker launched a new subsidiary, Latitude AI, dedicated to advancing semi-autonomous driving technology. This initiative incorporated approximately 25% of the workforce from Ford’s former self-driving affiliate, Argo AI. Latitude AI is tasked with developing a hands-free, eyes-off-the-road automated driving system designed for widespread deployment across millions of vehicles.
In a Bloomberg interview earlier this year, the CEO of Ford Motor Company (NYSE:F) announced that the company has successfully developed Level 3 autonomous driving capabilities in its prototype vehicles. This milestone represents significant progress in Ford’s journey toward advanced driver assistance systems. The company has already implemented Level 2 autonomy with the introduction of its BlueCruise technology, enabling hands-free driving.
Moreover, in the third quarter, Ford Motor Company (NYSE:F) reported a 4% increase in U.S. retail sales, outpacing the broader market. Its electric vehicle sales climbed by 12%, while the company maintained leadership in hybrid truck sales. The F-150 hybrid posted a 64% sales surge, and Lincoln’s sales rose 26%, with the Nautilus achieving its best third-quarter performance since 2007. Explorer sales also jumped by 25%. Year-to-date, Ford’s EV sales are up 45%, driven by strong demand for the F-150 Lightning and E-Transit van. Additionally, the Ford Pro Intelligence software platform recorded a 30% growth in subscriptions, reflecting the company’s growing focus on connected vehicle solutions.
6. Baidu, Inc. (NASDAQ:BIDU)
Number of Hedge Fund Holders: 54
Baidu, Inc. (NASDAQ:BIDU), a leading Chinese technology company, operates the largest internet search engine in China and has become a prominent name in the autonomy industry. The company runs Apollo Go Robotaxi, one of the few operational autonomous ride-hailing platforms globally, offering services in Wuhan, China. This platform provides Baidu, Inc. (NASDAQ:BIDU) with valuable real-world experience and insights into customer preferences.
On November 29, Baidu, Inc. (NASDAQ:BIDU) received its first license to test autonomous vehicles outside mainland China. Granted by Hong Kong’s Transport Department, this pilot license allows the company to trial 10 autonomous vehicles in North Lantau. The permit marks a significant milestone under Hong Kong’s new regulatory framework, showcasing Baidu’s progress in expanding its autonomous driving capabilities.
In contrast, however, JPMorgan downgraded Baidu from Overweight to Neutral, reducing its price target from $105 to $85 on November 27. The downgrade reflects concerns over declining earnings visibility amid uncertainties surrounding China’s economic recovery. While JPMorgan anticipates Baidu’s core advertising revenue to bottom out in Q1 2025 and gradually rebound, the pace of recovery remains uncertain. Despite these challenges, Baidu’s substantial cash reserves—approximately 84% of its market capitalization—and a $1 billion annual capital return policy provide a cushion against downside risks. The company’s cash valuation is also notably low, at just twice its estimated 2025 earnings, offering additional support to its long-term outlook.
5. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 64
General Motors Company (NYSE:GM), a legacy automaker with iconic brands like Chevrolet, GMC, and Cadillac, has long been a cornerstone of the automotive industry. While these brands are not traditionally considered high-growth ventures, GM has embraced innovation through its 2016 acquisition of Cruise, a leader in self-driving technology. Cruise currently operates a limited fleet of driverless robotaxis and last-mile delivery vehicles in select cities. GM plans to integrate some of Cruise’s advanced technology into consumer vehicles within the next few years.
In its Q3 earnings report released on October 22, General Motors Company (NYSE:GM) exceeded Wall Street’s expectations, prompting the company to revise its 2024 guidance upward. The automaker reported adjusted earnings per share of $2.96, surpassing the consensus estimate of $2.43, alongside revenue of $48.76 billion, beating the anticipated $44.59 billion. GM now forecasts full-year adjusted EBIT between $14 billion and $15 billion, an increase from prior estimates of $13 billion to $15 billion. Additionally, its automotive free cash flow guidance was raised to $12.5 billion–$13.5 billion, up from $9.5 billion–$11.5 billion.
On December 4, BofA Securities reaffirmed its Buy rating for GM with a price target of $85. The firm highlighted GM’s robust annual revenue of $182.72 billion and an appealing P/E ratio of 5.78. BofA anticipates that the strength of GM’s core North American business will continue to support earnings and cash flow. Furthermore, GM’s investments in electric vehicles, hybrid and fuel cell powertrains, and advancements in autonomous vehicle technology are expected to drive long-term growth beyond 2024.
Diamond Hill Capital stated the following regarding General Motors Company (NYSE:GM) in its Q2 2024 investor letter:
“Other top Q2 contributors included Extra Space Storage and General Motors Company (NYSE:GM). Shares of automobile manufacturer General Motors (GM) rose as its internal combustion engine business has also received a boost from the recent slowdown in electric vehicle adoption among consumers. GM also announced additional share repurchases in Q2, reinforcing its commitment to returning cash to shareholders.”
4. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
Tesla, Inc. (NASDAQ:TSLA), headquartered in Austin, Texas, is a leading American automotive and clean energy company. Renowned as a pioneer in the electric vehicle industry, Tesla has played a pivotal role in accelerating the global transition to sustainable transportation through its innovative electric cars and advanced energy solutions. However, its approach to full self-driving (FSD) technology remains a topic of debate. All Tesla vehicles are equipped with Autopilot, an advanced driver-assist system (ADAS) that includes adaptive cruise control and auto-steering to maintain lane position. The optional Full Self-Driving (FSD) package offers additional features, though drivers must remain attentive and ready to take control at any moment.
Unlike many of its competitors that use lidar (light detection and ranging) for mapping surroundings, Tesla, Inc. (NASDAQ:TSLA) is pioneering a camera-based approach through computer vision. To accelerate its FSD development, the automaker is building a cutting-edge supercomputer called “Dojo” to train its AI algorithms.
In the third quarter of 2024, Tesla, Inc. (NASDAQ:TSLA) demonstrated strong financial performance, largely fueled by increased vehicle deliveries. The company reported $25.18 billion in revenue, an 8% year-over-year increase, slightly below the $25.37 billion analyst estimate. On the other hand, the company surpassed earnings expectations, posting an EPS of $0.72 versus the forecasted $0.58, boosting investor confidence.
On December 5, BofA raised its price target for Tesla, Inc. (NASDAQ:TSLA) shares from $350 to $400 following a visit to the company’s Giga Texas factory in Austin. The bank highlighted the capability of Tesla’s FSD versions 12.5 and 13.2, which successfully navigated complex roadways autonomously. The company aims to achieve one intervention per 10,000 miles soon, a milestone critical for its planned 2025 robotaxi launch.
3. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 136
Uber Technologies, Inc. (NYSE:UBER) is a global leader in ride-hailing, food delivery, and freight services, operating across more than 70 countries. The company has transformed urban mobility by offering innovative, convenient, and cost-effective solutions to millions of users.
Autonomous technology is poised to play a pivotal role in Uber’s future strategy. The company positions itself as the platform partner of choice for various autonomous vehicle companies. For instance, General Motors plans to deploy its Cruise AVs on the Uber platform in the first half of 2025. This follows an October 2024 announcement of Uber’s multi-year partnership with Avride to integrate its delivery robots and autonomous vehicles into Uber and Uber Eats operations.
On October 31, Uber Technologies, Inc. (NYSE:UBER) reported its financial results for Q3 2024. The company’s revenue surged 20% year-over-year to $11.2 billion, while gross bookings grew 16% to $41 billion. Moreover, the platform facilitated 2.9 billion trips during the quarter, marking a 17% increase year-over-year, or an average of 31 million trips daily.
On November 26, BTIG reiterated its Buy rating for Uber Technologies, Inc. (NYSE:UBER) with a price target of $90. The firm’s analysis highlighted the U.S. mobility segment, focusing on revenue growth, insurance expenses, and 2025 projections. Insurance costs currently account for a low double-digit percentage of Uber’s bookings, with high-teen growth rates anticipated. BTIG projects high single-digit growth per ride and expects a rise in U.S. mobility EBITDA for 2025, despite fare increases slowing to 0-6%.
2. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 202
Alphabet Inc. (NASDAQ:GOOGL), a global tech giant, owns a diverse portfolio of products, including Google Search, Google Maps, YouTube, Google Cloud, and Waymo. Waymo, Alphabet’s autonomous driving division, operates fully driverless rides in several cities, including San Francisco, Austin, and Los Angeles. By mid-2024, Waymo had logged approximately 25 million rider-only miles and continues to develop its “Waymo Driver” system for autonomous ride-hailing services (Waymo One) and trucking solutions (Waymo Via). As of August, Waymo reported providing 100,000 robotaxi rides across San Francisco, Los Angeles, and Phoenix, Arizona.
Earlier in October, Waymo secured a record-breaking $5.6 billion funding round, led by its parent company, Google. This massive investment aims to accelerate Waymo’s expansion of its autonomous ride-hailing service across the U.S., solidifying its lead over competitors like Tesla. Alphabet Inc. (NASDAQ:GOOGL) had previously committed to a $5 billion multi-year investment in Waymo, as stated by CFO Ruth Porat back in July.
On October 30, BMO Capital Markets raised its price target for Alphabet Inc. (NASDAQ:GOOGL) to $217 from $215, maintaining an Outperform rating. BMO cited robust performance across Alphabet’s business segments, with particular emphasis on the acceleration of cloud revenue and effective monetization of search services.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Amazon.com Inc. (NASDAQ:AMZN), a global tech leader, dominates e-commerce, cloud computing, and streaming while owning Zoox, an autonomous ride-hailing startup acquired in 2020. Beyond robotaxis, Zoox aligns with Amazon’s logistics ambitions. As a top e-commerce operator with a vast delivery network, automating transportation could enhance efficiency and profitability in its retail operations.
Compared to market competitors, Zoox is rethinking what a vehicle can be, and it shows. The company’s robotaxi looks nothing like a traditional car. Instead, it’s designed purely for passengers, with a bidirectional cabin that can drive either way and four seats facing each other. “It’s a vehicle specifically made for people, not drivers,” says Jesse Levinson, Zoox’s co-founder and chief technical officer. “Without a human driver, we realized we could completely reinvent the riding experience.” With this approach, Zoox is aiming to lead the pack as it prepares to roll out driverless taxi rides in Las Vegas next year.
BofA Securities reiterated a Buy rating for Amazon.com Inc. (NASDAQ:AMZN) with a $230 price target, citing expectations of AWS revenue acceleration in 2025. The firm’s analysis highlights Amazon’s strong financials, including 12% revenue growth over the past year to $620 billion. Additionally, advancements in AWS’s quantum computing (Q capabilities) are driving AI benefits that encourage more businesses to transition to the cloud, bolstering long-term growth prospects.
While we acknowledge the potential of AMZN, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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