Saturday, December 2, 2023
Stocks To Buy

The 3 Most Undervalued Autonomous Driving Stocks to Buy in September 2023

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It makes sense to invest in autonomous driving stocks moving forward. Whether in September or any other month, the research is clear: The market is primed for growth boasting an annual growth rate approaching 23% between this year and 2028. The next five years are bound to produce spectacular gains for investors overall. That’s the economic narrative favoring the sector. This has led to the rise of autonomous driving stocks to buy.

The business case is being propelled by drivers who want their vehicles to act more and more like a couch on wheels. It’s an interesting thought that one day soon we all might finish work or leave the grocery store only to get into our vehicle and not have to drive.

That said, let’s consider some autonomous driving stocks.

Ambarella (AMBA) 

It’s very easy to make a compelling case that Ambarella (NASDAQ:AMBA) stock is undervalued. It’s equally easy to make the exact opposite case. 

The case in favor relies on the fact that Ambarella is one of the leading system-on-a-chip (SOC) AI manufacturers. The company has established its presence in the advanced driver assistance (ADAS) space and is in a position to benefit as the sector grows. All of those factors conspire to lend Ambarella a strong price target on Wall Street. The potential is very clearly evident and it’s easy to see why investors remain interested. 

At the same time, Ambarella has seen its revenues decline of late as its customers are flush with inventory from a buildup during the chip shortage. As CEO Fermi Wang notes, the near-term outlook is difficult. Ambarella expects that its customers will burn through that buildup by the end of the year setting up a strong sales environment thereafter. Thus, September could be a strong month for AMBA stock if investors catch on to that notion. If not, it’ll take longer but in either case, Ambarella’s shares look undervalued currently. 

Luminar Technologies (LAZR)

Luminar Technologies (NASDAQ:LAZR) is confident that it can someday make consumer vehicles uncrashable. That’s the kind of bold vision that makes the stock interesting to investors. The company provides chips for autonomous driving systems and also lidar systems to OEM vehicle manufacturers. 

Unlike Ambarella, Luminar Technologies is currently growing. Its business is more oriented toward the lidar systems side than the chip business. As a result, it isn’t sifting through the same cyclicality issues, at least not to the same degree. This makes it one of those autonomous driving stocks to buy.

Q2 revenues jumped to $16.2 million, up 63% in the second quarter. Losses remain large and are continuing to grow. That’s an obvious barrier to the improvement of its stock price, especially in the current rate environment. Growth stocks are beaten down due to the high cost of capital relative to pre-2021 levels. However, interest rates are flattening. That’ll be a great catalyst for LAZR shares at some point soon. Investors are bound to care more about the firm’s expectation of 100% revenue growth in 2023 than interest rates sooner or later. 

Innoviz (INVZ) 

Innoviz (NASDAQ:INVZ) is an Israeli LiDAR firm that doesn’t receive much press but continues to offer substantial upside. The expectations around the stock are highly optimistic and suggest that a dollar invested today could become four in time. 

The company started production within its BMW Group program in the second quarter shipping the first components for production vehicles in July. Those components are expected to be installed in BMW 7 series vehicles that will be available late this year or early in 2024. It’s clear that an investment in Innoviz is as much about current results as it is about future prospects. 

Revenues increased by 45% on a sequential basis at the firm. That growth led the company to update its 2023 full-year revenue range from $12-15 million to $15-20 million. Innoviz is undertaking a balancing act between losses and growth. It has roughly $130 million in current liquidity and loses roughly $30 million per quarter. Its success or failure hinges on ramping up OEM programs as quickly as possible. It’s another reason it’s one of those autonomous driving stocks to put on your watchlist.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.

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