Driverless cars are hot investments.

Autonomous vehicle technology is one of a handful of the largest potential long-term investment opportunities on Wall Street today. While AV technology has huge buzz in the auto industry these days, no company has yet to offer a fully autonomous vehicle experience for commercial use. With the AV market still wide open, Navigant Research recently ranked the top companies in AV technology today based on 10 criteria, including marketing strategy, technological capability and product quality/reliability. Investors who want to own the leaders in AV technology should buy these seven stocks, according to Navigant.

Next:Alphabet (ticker: GOOG, GOOGL) Credit

(GLENN CHAPMAN/AFP/Getty Images)

Alphabet (ticker: GOOG, GOOGL)

The gold standard in AV technology is surprisingly not an auto company. Navigant ranked Alphabet AV subsidiary Waymo as the clear leader in the AV market today. In December, Waymo launched Waymo One, a commercially available autonomous car service and app. The only caveat is that Waymo One vehicles still come equipped with trained test drivers to intervene if needed. Waymo has an autonomous vehicle fleet of about 600 cars, most of which are currently deployed in the Phoenix area, where it is opening a new 85,000 square-foot AV technical service center.

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Driverless cars are hot investments.

Autonomous vehicle technology is one of a handful of the largest potential long-term investment opportunities on Wall Street today. While AV technology has huge buzz in the auto industry these days, no company has yet to offer a fully autonomous vehicle experience for commercial use. With the AV market still wide open, Navigant Research recently ranked the top companies in AV technology today based on 10 criteria, including marketing strategy, technological capability and product quality/reliability. Investors who want to own the leaders in AV technology should buy these seven stocks, according to Navigant.

Alphabet (ticker: GOOG, GOOGL)

The gold standard in AV technology is surprisingly not an auto company. Navigant ranked Alphabet AV subsidiary Waymo as the clear leader in the AV market today. In December, Waymo launched Waymo One, a commercially available autonomous car service and app. The only caveat is that Waymo One vehicles still come equipped with trained test drivers to intervene if needed. Waymo has an autonomous vehicle fleet of about 600 cars, most of which are currently deployed in the Phoenix area, where it is opening a new 85,000 square-foot AV technical service center.

General Motors Co. (GM)

The top AV stock to buy among traditional auto companies is General Motors. GM’s Cruise AV unit was originally scheduled to launch a driverless robo-taxi service in late 2019, but the company recently delayed the launch indefinitely and said it must first log more driverless test miles. In May, GM said Cruise has roughly 1,500 employees and is valued at around $19 billion. GM management has said the robo-taxi business should ultimately be able to operate with profit margins of between 20% and 30%, well above the company’s overall 2018 profit margins of just 8%.

Ford Motor Co. (F)

Just a couple of years ago, Ford investors were critical of the company for its lack of aggression in updating its technology and market strategy. However, Navigant says Ford is now one of the top three market leaders in AV technology. In June, Ford announced it is expanding its AV testing to Detroit, the fifth city where it is collecting data on public roads. Ford is partnered with Argo AI in developing modified Ford Fusion Hybrids capable of self-navigation. Like other AV leaders, Ford is still including human safety drivers behind the wheel at this point.

Aptiv (APTV)

Google, Ford and GM are all household names on Wall Street, but Navigant’s next highest-ranked AV technology stock is under-the-radar play Aptiv. In January 2018, Aptiv partnered with ride-hailing company Lyft (LYFT) to launch an AV test project in Las Vegas. Since that time, Aptiv’s self-driving BMW 5 series vehicles have logged more than 50,000 test rides (with human test drivers). According to Lyft, the average driverless test ride received 4.97 stars out of 5. Also, 92% of customers reported feeling very safe or extremely safe in their driverless rides.

Intel Corp. (INTC)

Intel went all-in on AV technology in 2017 when the company acquired Mobileye for $15.3 billion. Intel is a somewhat unique play on AV technology. Not only does Mobileye have vision processor supplier partnerships with BMW, Audi, Nissan, Fiat Chrysler and Volkswagen, Intel also supplies Xeon CPUs for Waymo. Mobileye also supplies Lyft, Aptiv and Chinese AV leader NIO. Mobileye CEO Amnon Shashua recently said AV technology will cut the cost of ride-hailing services by up to 50%. Mobileye is scheduled to launch a robo-taxi service in Tel Aviv in 2022.

Volkswagen (VWAGY)

German automaker Volkswagen came in sixth in the Navigant AV technology ranking. In July, Volkswagen entered a new AV partnership with Ford. Ford and Volkswagen are investing a combined $7 billion in AV technology platform Argo AI. Volkswagen is even devoting resources to develop solutions to a potential major AV problem – a third of all vehicle passengers are susceptible to motion sickness, according to the National Institute of Health. Volkswagen began testing Level 4 (fully autonomous) vehicles in Hamburg, Germany in April. The test vehicles are each equipped with 11 laser scanners, 7 radars and 14 cameras.

Daimler (DDAIF)

German auto giant Daimler and partner Bosch recently became the first companies in the world to gain regulatory approval in Germany for a fully Level 4 autonomous parking function. Daimler and Bosch began their partnership four years ago. Bosch supplies the automotive tech and hardware for the AV vehicles, while Daimler supplies the Mercedez-Benz vehicles. Users can access the fully autonomous valet parking service via a smartphone app. Also, Daimler and Bosch are collaborating on a robo-taxi project in San Jose, California, and plan to have a fully autonomous vehicle available by the start of the next decade.

Top AV stocks that are leading the market:

Alphabet (GOOG, GOOGL)General Motors Co. (GM)Ford Motor Co. (F)Aptiv (APTV)Intel Corp. (INTC)Volkswagen (VWAGY)Daimler (DDAIF)1 of 10

Wayne Duggan, Contributor

Wayne Duggan has been a U.S. News & World Report contributor since 2016. He is an expert at ...  Read more

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