The advancement of Artificial Intelligence (AI), sensor technology, and electric vehicles will drive growth in what could become an explosive, lucrative market in the long term: driverless vehicles. The story is just beginning to unfold for a driverless vehicle market estimated to reach a market size valued at over $13 trillion by 2030. If you're looking to jump on this bandwagon early, here are three tantalizing stocks to consider.
Helping investors see clearly
Ambarella's (AMBA 1.05%) systems-on-chip (SoC) offer immense processing power to extract valuable data from high-resolution video and radar streams. Its products are used in a wide range of applications, including advanced driver assistance systems (ADAS), driver/cabin monitoring, autonomous driving, and robotics, among others.
It's what the company calls edge AI that should have investors excited. Edge AI refers to the company's products designed for on-device, or "edge" artificial intelligence applications, and the company sees two driving forces behind the market: the Internet of Things (IoT) and automotive. Ambarella's Serviceable Addressable Market (SAM) is expected to more than double from $5.5 billion in fiscal 2026 to $12.9 billion in fiscal 2031.
Many automotive safety and telematics applications now use AI inferencing technology, which increases the utility of drive recorders, e-mirrors, driver and occupant monitoring, and ADAS, which will drive growth for Ambarella. As driverless vehicles slowly launch us to a wildly different world of transportation, Ambarella should be well positioned to carve out its piece of a growing pie.
Robotaxi-ready
Nvidia (NVDA +0.03%) is the pioneer of GPU-accelerated computing, and its products act as the brain of computers, robots, and yes, even driverless vehicles. In October, the company made an announcement that signaled to investors that the company is continuing to dive into the driverless vehicle opportunity.
Image source: Getty Images.
More specifically, Nvidia announced it would partner with Uber Technologies to scale the world's largest level 4-ready mobility network. The idea is for Nvidia to enable faster growth across the level 4 autonomous ecosystem and to support Uber in scaling its global autonomous fleet to 100,000 vehicles over time, beginning in 2027.
Further, Nvidia and Uber will also support shared partners across the level 4 ecosystem, developing software stacks on the Nvidia DRIVE level 4 platform, further building the company's economic moat, and will work together to develop a data factory to curate and process data needed for autonomous vehicle development. As vehicles become increasingly electrified, software-defined, and complex, Nvidia is well positioned to post strong growth in automotive as driverless vehicles gain acceptance.
The holy grail
It might seem like a really bad time to buy QuantumScape (QS +4.53%) after the stock has soared nearly 300% over the past six months. Fear not, potential investors, as the company is still in the incredibly early innings of what could be a generational long-term opportunity.
NYSE: QS
Key Data Points
QuantumScape is building what could become arguably the most important part of driverless vehicles, which are increasingly likely to be electric vehicles. QuantumScape is developing and testing next-generation solid-state lithium-metal batteries that would increase range, reduce cost, and improve safety. These batteries would be highly valuable for fleets of high-mileage vehicles.
QuantumScape recently made a number of important announcements. First, management announced that the company officially started deliveries of QSE-5 samples, which is another step toward commercialization. Second, the company noted that a pivot toward a more "capital-light licensing focus" has helped extend the company's cash position, and management now expects its current cash position to last until 2030.
QuantumScape is a high-risk, speculative, and volatile stock, and the company just reported its first-ever customer billings during the third quarter. However, if QuantumScape reaches commercialization, long-term investors are poised for more gains similar to the past six months.
Not for everyone
If there's one thing Wall Street loves, it's massive upside. If there's one thing Wall Street hates, it's uncertainty. Unfortunately, for investors, the future of driverless vehicles is filled with both massive upside and uncertainty. QuantumScape is a volatile stock in the early innings of a long, difficult journey, but could revolutionize batteries for robotaxis and mainstream vehicles alike. Ambarella is struggling with its profitability, but has strong automotive growth potential, and Nvidia might be the biggest no-brainer buy of any driverless vehicle stock. Investors should keep these stocks on their watchlist because they could play a huge part in the driverless vehicle revolution.
