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Make Way for Driverless Cars: Top 5 Gainers

Tirthankar Chakraborty

Self-driving cars on American roads are almost a reality. By the end of this year, companies that manufactures these driverless cars are expected to launch a self-driving rideshare service.

Though some may not like the idea of a driverless car, many are keyed up about the concept. It’s worth pointing out that almost 40,000 people die each year in the United States, mostly due to automotive accidents. Self-driving cars are expected to bring down the numbers. As a plus, these cars will be able to reduce logistics expenses.

The biggest operating cost of maintaining a car right now is paying the driver. For instance, Uber collected $37 billion in fares last year, out of which $30 billion or 81% went to the drivers. Without a doubt, self-driving cars will slash this to zero. UBS, by the way, chipped in and said that driverless ride-sharing services will be 70% cheaper compared to Uber.

In America, it is estimated that nearly 63% people live in urban areas. And those who possess cars need to pay for loans, insurance, registration, inspection, repair, parking, oil and gas. These hassles can be avoided by simply availing a safer and less expensive self-driving car.
Here, we bring to you the best stocks to play the autonomous vehicle hype.

Alphabet

Google-parent Alphabet Inc. GOOGL is predominantly known for Google Search, Gmail, YouTube, Android and Chrome. The array of web services account for the vast majority of Alphabet’s revenues. In first-quarter 2019, its “other bets” segment that includes Waymo, Alphabet’s drivers’ vehicle subsidiary, played a significant role.

Waymo announced plans to build a 200,000-square-foot facility in Michigan, thereby setting up the world’s first factory for mass production of self-driving cars. Analysts at Morgan Stanley now value Waymo at around $175 billion. Notably, Waymo’s driverless fleet is now covering one million miles per month.

Alphabet has an average four-quarter positive earnings surprise of 19.02%. The company has outperformed the broader Internet - Services industry over the past two-year period (+12.8% vs -14.6%).

Tesla

Tesla, Inc. TSLA has delivered more than 300,000 cars in 2017and has gone on to double that count over the last five quarters. The company’s current fleet now represents partial automation, which the company aims to fully convert into self-driving platforms in the near future.

Tesla has an average four-quarter positive earnings surprise of 117.58%. The company has outdone the broader Automotive - Domestic industry over the past decade (+1079.3% vs +211.2%).

Uber

Uber Technologies, Inc. UBER has gained a lot of popularity by providing taxi services through its app. And it has announced that it is testing driverless cars to add to its fleet. Brian Johnson, an analyst for Barclays, said that such a move will help Uber trim cost of a ride by an extra 34 cents per mile.

Uber has an average four-quarter positive earnings surprise of 2.59%. The company has surpassed the broader Internet - Services industry over the past year (+7.9% vs -17.0%).

Intel

Intel Corporation INTC doesn’t have its own autonomous driving platform. But, the company’s $15.3-billion acquisition of Mobileye helped it build chips for self-driving systems. Intel has agreed to supply EyeQ5 chip in 8 million driverless vehicles for a European automaker.

Intel has an average four-quarter positive earnings surprise of 8.50%. The company has outpaced the broader Semiconductor - General industry over the past two-year period (+36.1% vs +25.7%).

Nvidia

From automakers to research teams to startups, all depend on Nvidia NVDA for hardware and software solutions for self-driving vehicles.

The company has an average four-quarter positive earnings surprise of 3.94%. The company has outperformed the broader Semiconductor - General industry so far this year (+14.7% vs +7.8%).

By the way, all the aforesaid self-driving car stocks possess a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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