14 Best Self-Driving Car Stocks To Invest In

Published on May 29, 2023 at 10:11 am by Aima Zaheer in Hedge Funds, News

In this article, we will take a look at the 14 best self-driving car stocks to invest in. For more stocks, head on over to 5 Best Self-Driving Car Stocks To Invest In.

According to Fortune Business Insights, the autonomous cars market size is expected to increase from $1.63 billion in 2022 to $19.96 billion by 2029. This would reflect a compound annual growth rate (CAGR) of 42.97%. The Covid-19 pandemic had a significant impact on the demand for self-driving cars, as reflected by the decline of 20.29% in the market size in 2020 in comparison to 2019. As the advancement of autonomous vehicles is dependent on a range of technologies, including automated driving systems, battery management systems and LiDAR, the interruption in the global supply chain networks and low availability of semiconductor chips restricted market expansion. In the aftermath of the pandemic, various governments and regulatory bodies implemented long-term strategies to reduce dependency on external sources for the raw materials required in the production of autonomous vehicles. For example, Europe introduced the European Chips Act, which was passed by the U.S. government in 2021 to enhance domestic chip production.

The increasing adoption of self-driving cars is being driven by a number of trends. One such trend is the implementation of stringent emission regulations, which has forced automakers to focus on developing automated energy-efficient vehicles such as fuel-cell electric vehicles. Furthermore, autonomous driving also offers the potential to enhance mobility for elderly drivers by offering them alternative transportation options beyond public transport services. Autonomous driving technology can provide increased safety benefits as well. A study by ICDP has indicated that the widespread adoption of advanced driver-assistance systems (ADAS) in Europe could lead to a potential reduction of approximately 15% in the number of accidents by 2030.

According to McKinsey’s 2021 survey, which gathered insights from over 25,000 consumers regarding their mobility preferences, approximately 25% of respondents expressed a strong inclination towards selecting an advanced autonomous driving feature when purchasing a new vehicle. Furthermore, around two-thirds of these respondents indicated their willingness to deposit a one-time fee of $10,000 or a corresponding subscription rate for an L4 highway pilot system. An L4 highway pilot offers hands-free driving capabilities on highways, subject to specific conditions. Keeping in view the rising demand for self-driving cars, the majority of prominent automakers are investing on a large scale in autonomous technology to facilitate its early adoption in their vehicles. Companies such as Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL) have also formed various strategic collaborations and partnerships. For instance, in April 2021, it was reported that Apple Inc. (NASDAQ:AAPL) aims to collaborate with LG to produce its first autonomous vehicle model. Earlier, the tech giant was also rumored to be in talks with Hyundai and Kia regarding its electric car project, known as the “Apple Car.” Furthermore, Waymo, Alphabet’s self-driving car company, also joined forces with Chinese automaker Geely to establish a fleet of all-electric, self-driving vehicles. These initiatives signify the collective efforts being made to bring autonomous vehicles to the forefront of transportation.

14 Best Self-Driving Car Stocks To Invest In

Photo by Samuele Errico Piccarini on Unsplash

Our Methodology

To create our list of the best self-driving stocks, we initially compiled a comprehensive list of companies developing self-driving technology and operating in the autonomous vehicles sector. Then, we used Insider Monkey’s database of 943 hedge funds as of Q1 2023 to select the stocks with the highest number of hedge funds investors. The stocks have been ranked in ascending order of the hedge fund ownership.

Best Self-Driving Car Stocks To Invest In

14. Lyft, Inc. (NASDAQ:LYFT)

No of Hedge Fund Holders: 31

Lyft, Inc. (NASDAQ:LYFT) is a California, United-States-based ride-hailing company.

Lyft, Inc. (NASDAQ:LYFT) plans to introduce a substantial fleet of driverless cars this year. To achieve this goal, the company has collaborated with self-driving car developer Motional to enhance its existing robotaxi service in Las Vegas. As of 2023, Lyft, Inc. (NASDAQ:LYFT) has already provided over 100,000 self-driving rides to customers. Click here to read the company’s earnings call transcript for Q1 2023.

13. Ford Motor Company (NYSE:F)

No of Hedge Fund Holders: 38

Ford Motor Company (NYSE:F) is one of the leading auto manufacturers globally.

Ford Motor Company (NYSE:F) has a division, Ford Autonomous Vehicles LLC, dedicated specifically to the research of self-driving car technology. The division currently owns a fleet of approximately 90 Ford Fusion Hybrid sedans that are equipped with autonomous driving technology. In March, Ford Motor Company (NYSE:F) also made an announcement regarding the establishment of a new wholly-owned subsidiary called Latitude AI. This subsidiary will be driving the company’s initiative to develop an advanced driving system that enables hands-free and unsupervised driving. Ford Motor Company (NYSE:F) offers an annual forward dividend yield of 10.98% as of May 26.

12. Baidu, Inc. (NASDAQ:BIDU)

No of Hedge Fund Holders: 43

Baidu, Inc. (NASDAQ:BIDU) is a Beijing, China-based company specializing in artificial intelligence solutions and internet services.

Baidu, Inc. (NASDAQ:BIDU) has established itself in the autonomous vehicles market through its autonomous ride-hailing business. The company plans to establish the largest fully driverless ride-hailing zone globally in 2023 by expanding its operations and introducing 200 driverless robotaxis into its fleet during this year.

Here’s what Horos Asset Management said about Baidu, Inc. (NASDAQ:BIDU) in its Q4 2022 investor letter:

“As I mentioned at the beginning of this quarterly letter, we took advantage of the meltdown in technology platforms to initiate new positions in companies in which we had already been shareholders in the past and whose valuation did not, until now, provide a sufficiently high margin of safety. Such is the case of PayPal and Baidu, Inc. (NASDAQ:BIDU).

In the case of Baidu, as many will know, it is known as the “Chinese Google”. The company has been the leading Internet search engine in the Asian country for years, which has given it a historically privileged position to monetize, through online advertising, a huge user base. However, the rise of two types of applications has called into question the sustainability of its business model. On the one hand, mobile social apps, such as ByteDance’s well-known TikTok, have emerged as a new model of online consumption, generating a new platform through which to monetize Internet users. On the other hand, even more disruptive in the long term, is the emergence of the so-called super apps: a sort of virtual Swiss Army knives that allow users to access many products and services without having to leave their interface at any time, making Baidu’s traditional search engine less attractive. In this field, Tencent (with its super app Weixin/WeChat), Alibaba (Alipay) and Meituan certainly stand out. These two factors have caused Baidu’s online advertising market share to drop from 17% in 2017 to less than 7% estimated for 2022.34 To this deterioration, we should add the collapse in market value of its stake in iQiyi (video platform controlled by Baidu) and its equity holdings such as Trip.com (hotel and flight platform) …” (Click here to read the full text)

11. Aptiv PLC (NYSE:APTV)

No of Hedge Fund Holders: 46

Aptiv PLC (NYSE:APTV) is a Dublin-Ireland-based automotive technology company.

In 2021, Aptiv PLC (NYSE:APTV) revealed its advanced technology platform for automated driving. The company’s platform is adaptable to different vehicles and can receive wireless updates for feature upgrades. Impax Asset Management was the leading hedge fund investor in Aptiv PLC (NYSE:APTV) during Q1 2023.

Here’s what TimesSquare Capital Management said about Aptiv PLC (NYSE:APTV) in its Q4 2022 investor letter:

“Aptiv PLC (NYSE:APTV), a designer and manufacturer of vehicle components for original equipment manufacturers, rose 19%. Results from the latest quarter were above expectations and management maintained the outlook for revenue growth on bookings strength. Management acknowledged that 2023 could be difficult to forecast due to macroeconomic headwinds.”

10. QUALCOMM Incorporated (NASDAQ:QCOM)

No of Hedge Fund Holders: 69

QUALCOMM Incorporated (NASDAQ:QCOM) is engaged in the production of wireless technologies for various sectors.

QUALCOMM Incorporated (NASDAQ:QCOM) is gaining momentum globally in the field of autonomous driving through the company’s Snapdragon Ride Platform, which is facilitating innovation for top-tier automakers. QUALCOMM Incorporated (NASDAQ:QCOM) stock offers an annual forward dividend yield of 2.90% as of May 26.

Madison Investments shared its outlook on QUALCOMM Incorporated (NASDAQ:QCOM) in its Q1 2023 investor letter. Here’s what the firm said:

“QUALCOMM Incorporated (NASDAQ:QCOM) stock was volatile during the quarter but moved higher in March. Qualcomm fundamentals have been hurt over the last several quarters due to excess smartphone inventories. Management messaged in their recent conference call that inventory issues peaked in their first fiscal quarter and should begin to moderate. They are also seeing excess inventory in their IoT (Internet of Things) business, which will take a couple of quarters to work through. By our estimates, Qualcomm fundamentals should trough in the June quarter with a second-half recovery. Qualcomm remains well positioned to diversify away from smartphones with long-term growth in Auto and IoT.”

9. General Motors Company (NYSE:GM)

No of Hedge Fund Holders: 73

General Motors Company (NYSE:GM) is a Michigan, United States-based automotive manufacturing company.

In 2022, the CEO of General Motors Company (NYSE:GM) shared that the company aims to sell completely autonomous vehicles by 2025. In March this year, General Motors Company (NYSE:GM) revealed its latest semi-autonomous driving technology with updates such as object avoidance and automatic lane change.

On May 1, Adam Jonas at Morgan Stanley upgraded General Motors Company (NYSE:GM) from Equal Weight to Overweight and raised the price target on the stock from $35 to $38. The investment firm has named General Motors Company (NYSE:GM) amongst the “top 5” companies in the auto sector.

8. Micron Technology, Inc. (NASDAQ:MU)

No of Hedge Fund Holders: 73

Micron Technology, Inc. (NASDAQ:MU), a semiconductor manufacturing company, is playing an integral role in developing advanced automotive applications. The company’s memory and storage technology are helping power autonomous driving solutions.

Of the 943 hedge funds in Insider Monkey’s database, Micron Technology, Inc. (NASDAQ:MU) was held by 74 hedge funds as of Q1 2023. Orbis Investment Management raised its stake in Micron Technology, Inc. (NASDAQ:MU) by 611% during the first quarter of the year.

7. Tesla, Inc. (NASDAQ:TSLA)

No of Hedge Fund Holders: 82

Tesla, Inc. (NASDAQ:TSLA) is a Texas, United States-based automotive company. The company has secured seventh place on our list of the best self-driving car stocks to invest in.

Tesla, Inc. (NASDAQ:TSLA) vehicles are equipped with advanced hardware, which allows them to offer autopilot capabilities. CEO Elon Musk is betting on full-self driving and related advanced technology vehicles to drive Tesla, Inc.’s (NASDAQ:TSLA) profits in the future and help the company compete against its rivals.

Here’s what Baron Funds said about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2023 investor letter:

“Tesla, Inc. (NASDAQ:TSLA) designs, manufactures, and sells EVs, related software and components, and solar and energy storage products. Following a sharp decline at the end of 2022, Tesla’s stock rebounded in the first quarter of 2023 on investor expectations that Tesla will continue to grow vehicle deliveries and maintain solid gross and operating margins despite a potential recession, competition in China, and vehicle price reductions. We wrote a long piece on Tesla last quarter and refer readers back to it, because for long-term investors not much has changed over the last three months. Tesla did hold its first Investor Day in March, and several Baron analysts and portfolio managers attended. We toured the Austin Gigafactory, drove in a Cybertruck, boarded a Semi truck, and spoke with a wide swath of Tesla senior managers. During the formal presentation, Tesla highlighted, among other things: (1) its broad and deep bench of executive talent supporting CEO Elon Musk; (2) its “Master Plan 3–Sustainable Energy for All of Earth,” which featured EVs, renewable power from solar and wind, and stationary electric storage; (3) its vehicle assembly innovations, including massive casted parts (building Model Y bodies with single front and rear castings, replacing a substantial number of parts and fastening steps), a stainless steel exoskeleton (for Cybertruck), and its next-generation highly efficient “unboxed process” for its next-gen $25,000 vehicle; (4) a future permanent[1]magnet electric motor that will not require any rare earths; and (5) the massive untapped market opportunity for commercial stationary electric storage, branded Megapack, as the world steadily shifts to renewable energy. As long-term shareholders, we have witnessed Tesla exploit its innovative Model 3/Y now-global mass-market platform to increase vehicle deliveries from barely a standing start to over 1.3 million units, while achieving industry-leading margins and reinforcing its iron-clad balance sheet to almost $23 billion in cash (and effectively no recourse debt). We expect Tesla’s next-generation EV and Megapack products to have a similar impact on company results.”

6. Advanced Micro Devices, Inc. (NASDAQ:AMD)

No of Hedge Fund Holders: 91

Advanced Micro Devices, Inc. (NASDAQ:AMD) is engaged in the production of semiconductors and related technologies for various sectors.

Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the best self-driving car stocks to invest in, as the company is heavily involved in the production of advanced sensors, domain controllers, and high-performance processors used in autonomous vehicles. As of Q1 2023, 91 hedge funds held a stake in Advanced Micro Devices, Inc. (NASDAQ:AMD).

Here’s what Falcon Capital Management said about Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q1 2023 investor letter:

“Last quarter we added Advanced Micro Devices, Inc. (NASDAQ:AMD) to the portfolio at 18x earnings and quickly made it into a top 5 position. At that time, Mr. Market was worried about earnings revisions for semiconductor stocks. In Q1 2023, it has been one of our best performing positions with the stock up 50%! In just three months, the market realized that Artificial Intelligence (AI) and related technologies require a lot of semiconductors. Mr. Market really is manic depressive but this volatility can give the enterprising investor just enough of a window to pick stocks with attractive risk rewards.”

In addition to Advanced Micro Devices, Inc. (NASDAQ:AMD), companies such as Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Apple Inc. (NASDAQ:AAPL) are also some of the best self-driving stocks to invest in.

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