Autonomous vehicles (AV) are the next major revolutionary development for transportation. If we look at previous innovations in transportation like the domestication of horses, bicycles, or…
automobiles, we see that they had major impacts in terms of how people live, work, and socialize.
We may be a couple of decades away from autonomous vehicles becoming ubiquitous, but they offer similar promises in terms of changing human existence. Auto fatalities would decrease as would traffic congestion. Commuting would become more pleasurable and productive. People would have more flexibility and options when it comes to choosing where they want to live. Infrastructure and urban life would improve as there would be less need to provide designated parking spaces.
Many investors are interested in this theme because it is likely going to be more than a trillion-dollar industry. One strategy is to try to pick the winners and losers out of the automakers, component providers, and tech companies who are competing in this space. The other option is to bet on the companies that are going to be part of the AV supply chain, as these offer a much higher chance of success.
Here are 3 stocks that will benefit from the AV boom:
TSLA needs little introduction as its the leading EV company in the world. It also has an early mover advantage in terms of autonomous vehicles (AV) as it is operating a pilot program. Further, the company is acquiring massive amounts of data that can be used by its AI to continually improve.
Over the past couple of decades, many tech niches have become winner-take-all due to network effects. This essentially means that products get better with more users. In turn, this attracts more users, leading to a positive feedback loop. The most common examples are Google search which is the best search engine, because the more people use and engage with it, the more it improves. Another is Facebook and social networks which are more valuable as they grow in size.
It’s likely that autonomous vehicles (AV) will follow a similar path and only one or two winners will emerge. Tesla is in the lead, and no one is really close. CEO Elon Musk is notorious for his optimistic predictions about when full self-driving will be available. While the timeline is unclear, it’s very clear that Tesla is the best-positioned to dominate this industry as it has EVs.
ON Semiconductor (ON)
ON designs and builds intelligent sensing and power technologies for its customers in the automotive, telecom, aerospace, and medical industries.
A major reason that ON should be on the radar of investors, interested in under-the-radar growth opportunities, is that it provides exposure to the electric vehicle (EV) and AV industry. ON Semiconductor supplies a variety of…
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