We recently published a list of 11 Best Lidar Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Luminar Technologies, Inc. (NASDAQ:LAZR) stands against other best Lidar stocks to buy according to hedge funds.
The United Nations reports that approximately 1.35 million people die on the road annually, often due to human error. Despite various safety measures, accidents persist, driving the push for self-driving cars. These vehicles use Lidar (Light Detection and Ranging) technology to emit laser pulses, creating a 3D map of their surroundings in microseconds, allowing faster reaction times than human drivers.
According to S. N. Jha, the Principal Consultant at Fact.MR, Lidar sensors are very accurate, a fact that is driving the popularity of AVs. He writes: “Lidar sensors have been proven accurate in various autonomous driving technologies and, subsequently, are deployed in the automotive industry. Moreover, increasing expenditures in the development of numerous autonomous driving technologies are projected to stimulate the demand for Lidar sensors and scanners in multiple automotive applications in the coming 10 years.”
And there is plenty of evidence backing Jha’s assertions. Markets and Markets valued the Lidar market at $1.4 billion in 2023 and estimated that it would expand at an 18.2% CAGR between 2023 and 2029.
However, it is possible that the estimates are hugely conservative or do not expand their focus beyond autonomous cars. In recent years, some companies have developed concepts of autonomous drones and robots for use in logistics. Their goal is to get goods, especially in an e-commerce setting, from point A to B without a human in control. Besides reduced accidents, the “autonomous-ization” of logistics could lower operational costs for e-commerce companies, increase efficiency, and help them contribute positively to the battle against global warming.
ARK Invest estimates that companies in the autonomous logistics space could generate as high as $80 billion in revenue by 2026. This value may multiply exponentially to $920 billion by 2030. With all these different applications for Lidar technology cropping up, it is possible that no one is capable of doing justice to the potential of the Lidar market. We haven’t yet touched on how the increasing adoption of artificial intelligence (AI) is likely to boost demand for lidar technology. For instance, AI and large language models (LLMs) improve the processing and analysis of Lidar data, increasing the technology’s accuracy and safety.
Our Methodology
To compile our list of the best Lidar stocks to buy, we first researched extensively to identify companies with significant exposure to LiDAR technology. We defined exposure in terms of manufacturing Lidar products or components, developing Lidar-related solutions, or integrating Lidar tech into other products. We then analyzed these companies based on their hedge fund holdings in Q3 2024. The finalists are stocks with the most hedge fund interest.
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).
A factory worker using an ultra-sensitive pixel-based sensor while working on an automobile.
Luminar Technologies, Inc. (NASDAQ:LAZR)
Number of Hedge Fund Holders: 10
Luminar Technologies, Inc. (NASDAQ:LAZR) is one of the three companies whose IPO in 2020 set in motion the lidar race. It was the second Silicon Valley firm working on the sensors for self-driving vehicles to go public. The company’s technology is used in Volvo’s EX90 electric SUV.
Besides the SUV, Luminar Technologies, Inc.’s (NASDAQ:LAZR) lidar technology is featured as standard equipment in several other Volvo cars. The company has another development contract with Toyota, whose technology will power the ADAS system in new cars.
Late last year, Luminar reorganized its top leadership. Michael Southard was appointed as VP of Engineering, and Alex Fishkin was appointed as Chief Legal Officer.
“We’re setting Luminar up for success in 2025 with leadership enhancements to help us achieve our two main goals for next year: strong growth and increased efficiency,” said Austin Russell, Founder and CEO.
Despite facing near-term industry headwinds, Luminar’s financial position is improving. The company’s Q3 2024 non-GAAP free cash flow improved by approximately $20 million compared to the previous quarter. This was a result of the recent cost-cutting actions, including headcount reductions in non-technical roles.
“Today, nearly every major automaker has LiDAR planned into their roadmaps,” noted Russell, emphasizing the company’s position in what he calls a “trillion-dollar industry.”
Overall, LAZR ranks 7th on our list of best Lidar stocks to buy according to hedge funds. While we acknowledge the potential of LAZR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LAZR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
