3 AI Stocks That Are Revolutionizing the Auto Industry
Auto AI stocks are a great investment opportunity for investors. With technological advancement comes a profound change for the automotive sector. This is mainly due to the rise of artificial intelligence, or AI. The growth potential…
Auto AI stocks are a great investment opportunity for investors. With technological advancement comes a profound change for the automotive sector. This is mainly due to the rise of artificial intelligence, or AI. The growth potential of AI-powered automobiles is significant. And companies at the forefront of this technology are well-positioned to experience substantial growth in the coming years.
The convergence of AI and the automobile industry has created a new ecosystem of AI-powered vehicles and connected infrastructure. As a result, the automotive sector has become a prime area of focus for companies operating in the AI domain.
Several companies have invested significantly in developing AI-powered automobiles, including self-driving cars, predictive maintenance systems, and intelligent infotainment systems. Many companies are not traditional automobile manufacturers. However, they offer value as investment plays in the space.
Auto AI stocks can expose investors to new business models and revenue streams. As the industry continues to evolve, we can expect to see new opportunities emerge, such as subscription-based services, data monetization, and mobility-as-a-service platforms. By investing in automobile AI stocks, investors can participate in the growth stemming from this area.
Furthermore, auto AI stocks can provide diversification benefits to a portfolio. As AI technology becomes increasingly pervasive across industries, investing in AI automobile stocks can give exposure to a growing industry while diversifying across sectors.
In summary, auto AI stocks present a compelling investment opportunity for investors looking to benefit from the transformational changes in the automotive industry. These stocks offer growth potential, exposure to new business models and revenue streams, and diversification benefits to a portfolio.
Nvidia (NASDAQ:NVDA), a reputable chip and software company, is at the forefront of developing technology for autonomous vehicles (AVs). It has a solid customer base of automotive partners, including Range Rover, Jaguar, and XPeng (NYSE: XPEV)
The semiconductor giant is partners with Mercedes-Benz (OTCMKTS:MBGYY), providing its AV technology to its current vehicle supply. Nvidia also partners with Amazon’s (NASDAQ:AMZN) subsidiary Zoox for its fully autonomous taxi service.
Nvidia’s stock has been impacted by disappointing quarterly results and tepid guidance, with the primary driver being declining demand for its gaming graphic processing units (GPUs). The company’s management has noted that macroeconomic challenges continue to affect consumers. Hence, demand for high-quality gaming GPUs has begun to fall.
However, demand for personal computers and related components has surged, as more consumers shift to working and learning from home. That said, the semiconductor shortage has made it difficult for manufacturers like Nvidia to keep up with this demand.
Additionally, consumers are cutting back on spending due to inflation, leading to declining demand for gaming products.
Despite the challenges faced by the gaming GPU segment, Nvidia’s growth in other areas, such as data center and automotive, has remained strong. The company’s recent partnership with Foxconn (OTCMKTS:HNHPF) to develop automated and autonomous vehicle platforms based on its NVIDIA DRIVE Orin and DRIVE Hyperion technologies highlights its continued commitment to expanding its presence in these areas.
With a reported $566 million in revenue from its automotive department for the fiscal year 2022, Nvidia’s automotive division will grow alongside the AV industry. Nvidia is developing chips not only for personal vehicles but also for complete AV commercialization.
Source: TY Lim / Shutterstock.com
Ford (NYSE:F) is pursuing AI initiatives in the automotive industry to enhance its products and services. In addition to its Co-Pilot360 system, which uses machine learning to detect and respond to potential collision risks, the company is exploring ways to incorporate AI into its manufacturing processes to increase efficiency and reduce costs.
Ford is also partnering with other companies in the tech and transportation sectors to explore new AI applications, including working with Qualcomm (NASDAQ:QCOM) on vehicle-to-everything (V2X) communications technology that allows vehicles to communicate with other vehicles, traffic infrastructure, and pedestrians.
Ford’s BlueCruise technology is already incorporated in many of its production vehicles, with the company expecting connected advanced-driver-assistance systems to generate $20 billion in revenue annually by 2030.
With these initiatives, Ford is positioning itself as a leader in AI innovation in the automotive industry. It comes at a critical time for the iconic automaker.
Although Ford is a huge brand name, its stock is down over 17% over the last six months. A sharp decline began after the company reported its fourth-quarter earnings, during which CEO Jim Farley expressed disappointment over the missed profit expectations in 2022.
However, we are seeing signs of a recovery. Ford reported a significant increase in February sales, 20% higher than the previous year. Sales totaled 157,606 vehicles, a 7.7% increase from the last month. Additionally, the company’s F-Series pickups sales rose by 22%, including a significant increase in its electric F-150 Lightning sales.
With shares trading at a bargain-basement price, the time to strike is now.
General Motors (GM)
Source: Jonathan Weiss / Shutterstock.com
General Motors (NYSE:GM) is perhaps the biggest player in automobiles on the world stage. Last year, it reclaimed its crown from Toyota (OTCMKTS:TOYOF) to become, once again, the largest automaker in the U.S. by sales volume.
Due to its dominance in the internal combustion engine cars market, people forget GM is also focusing on AI.
The iconic car maker wants to have a fleet of autonomous vehicles ready for sale by the middle of the decade, an ambitious target. It has already undertaken several initiatives to make this goal a reality.
For example, General Motors is the first automaker to get approval for fully autonomous vehicle testing on public roads in San Francisco.
In addition, GM is looking further to integrate its AV technology into other commercial vehicles. As technology is evolving, so is the automaker.
The integration of AV technology into commercial and personal vehicles is expected to continue through features such as adaptive cruise control. The technology uses sensors to alter the vehicle’s speed in response to traffic conditions.
GM’s Cruise autonomous vehicle division is looking at $50 billion in revenue by 2027. The additional revenue is expected to come with high-profit margins, considering the lack of overhead costs.
In summary, the company’s commitment to AV technology will transform the automotive industry. At the same time, it will enhance the bottom line.
On the publication date, Faizan Farooque did not hold (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.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.
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