Many driverless car stocks have been especially hard-hit by the recent stock market volatility. The outlook for this promising niche remains bright, though, with some industry players expecting it to grow to around $20 billion in 2020 on its way to $70 billion in 2030.
With that potential in mind, we reached out to a few Motley Fool contributors to find out which driverless car investments were worth watching as we enter the new year. Read on to find out why Intel (NASDAQ:INTC), NVIDIA (NASDAQ:NVDA), and BlackBerry (NYSE:BB) topped that list.
This chipmaker has big plans for driverless cars
Leo Sun (Intel): Intel is the biggest maker of PC and data center CPUs in the world. Those two businesses still generate the lion's share of its revenue, but the chipmaker has also aggressively expanded into the automotive market with its acquisitions of Mobileye, Movidius, and other developers of computer vision chips.
Mobileye is the world's leading maker of advanced driver-assistance systems (ADAS). The company uses a combination of older camera and radar technologies to help cars stay in a single lane or spot obstacles while parking. Mobileye also produces the EyeQ chips, a series of advanced computer vision chips that power fully autonomous cars.
Movidius produces computer vision chips that can be installed in drones, cars, and other devices. All those technologies complement Intel's own Atom automotive chips.
Intel, Mobileye, BMW, Fiat Chrysler, Delphi, and other companies are working together to launch a new driverless platform powered by those technologies in the near future. When that happens, Intel could emerge as a major force in next-gen automotive chips alongside NXP and NVIDIA.
That new market would reduce Intel's dependence on the PC and data center markets, where it faces fresh challenges from a resurgent AMD, ongoing chip shortages, and the development of in-house data center chips by tech giants like Amazon. Intel's driverless chips won't move the needle for the company anytime soon -- but they could become a major growth driver as more driverless cars hit the road.
Jamal Carnette, CFA (BlackBerry): BlackBerry's failure in smartphones -- and its accompanying 90% stock sell-off -- has been well-documented, but investors need to understand this is no longer the same company. CEO John Chen has increasingly tied BlackBerry to cybersecurity and autonomous cars. Automotive aspirations are a key facet of Chen's grand vision: Under Chen, the company has partnered with car companies like Ford and Land Rover's Jaguar, and technology companies like Baidu and NVIDIA, to design a secure autonomous car using the company's QNX operating system. Chen's vision in autonomous vehicles is starting to pay off: In the recently released third fiscal quarter, BlackBerry reported 23% revenue growth in its BlackBerry Technology Solutions group, mostly on account of its automotive applications.
While it's important to acknowledge that not all this growth is due to self-driving systems, QNX already exists in millions of cars providing infotainment, hands-free systems, noise control, and advanced driver-assist systems. Self-driving is simply a next step in the deepening of these relationships. BlackBerry is no longer the failed smartphone maker and is poised to be a major player in the next big thing in tech. Investors would be wise to put the company on their watch lists.
Trust the autopilot
Demitri Kalogeropoulos (NVIDIA): Shareholders of NVIDIA stock have seen their investments tumble to well below broader-market returns in recent weeks. The catalyst for that slump was a third-quarter report, in mid-November, that showed collapsing demand for products tied to cryptocurrency mining. That shift pushed sales down slightly in NVIDIA's core gaming category compared to the prior quarter. Its other divisions continued to expand, though, including an automotive segment that rose 19% year over year, thanks to popular products like its drive PX platform.
NVIDIA stock might have further to fall given its rally over the past three years and the prospect that profitability will fall back to historical averages. But the company isn't predicting such a slowdown yet. Instead, CEO Jensen Huang and his team are calling for gross profit margin to surpass 62% of sales for the quarter that ends in January as NVIDIA completes working through excess inventory from the bitcoin bust. Stabilization in its gaming segment, and continued growth in emerging categories like autonomous driving and artificial intelligence, would show that traders overreacted by sending the stock sharply lower in the waning weeks of 2018 and set shareholders up for a much better year ahead.
Editor's note: A previous version of this article contained an incorrect ticker for BlackBerry.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Demitrios Kalogeropoulos owns shares of Amazon. Jamal Carnette, CFA owns shares of Amazon. Leo Sun owns shares of Amazon, Baidu, and Ford. The Motley Fool owns shares of and recommends Amazon, Baidu, and Nvidia. The Motley Fool recommends BMW, Ford, and NXP Semiconductors. The Motley Fool has a disclosure policy.