Autonomous vehicles have already started taking share within ride-sharing and trucking industries this year, and Goldman Sachs believes the penetration will only accelerate moving forward.
According to its analyst Mark Delaney, it has already been well established that self-driving tech works, and “the key focus for investors is now on the pace at which AVs will grow and how big the market will become.”
Melaney’s current estimate sees autonomous vehicles making up 8% of the US ride-share market by the end of this decade as commercial operations continue to expand to dozens of new cities.
For those interested in gaining exposure to the expected rapid growth in autonomous vehicles in the years ahead, Goldman Sachs recommends owning the following three stocks.
Lyft Inc (NYSE: LYFT)
Goldman Sachs believes AV-related risks to ride-sharing companies like Lyft are overblown and fully baked into the stock prices already.
In fact, the investment firm is convinced that LYFT will “continue to enter into partnerships” to eventually play a central role in generating demand for autonomous vehicles.
Mark Delaney currently rates Lyft stock at “buy”. His $20 price target on the ride-hailing company indicates potential upside of nearly 40% from current levels.
Note that Lyft Inc. recently increased its total share repurchase authorisation to $750 million, which makes up for an additional reason to own it in the back half of 2025.
Alphabet Inc. (NASDAQ: GOOGL)
Google-parent Alphabet is an exciting means to play self-driving, particularly because it has already produced palpable results for investors in the AV market.
Waymo currently leads the US autonomous vehicles market, averaging as many as a quarter-million rides per week according to its most recent update.
Goldman Sachs currently has a “buy” rating on GOOGL stock with a price target of $220, signaling potential upside of well over 25% from current levels.
A dividend yield of 0.48% tied to Alphabet shares at writing makes them even more exciting to own in 2025.
TE Connectivity Plc (NYSE: TEL)
Goldman Sachs sees “incremental content opportunities” in this Galway-headquartered firm since high-speed connectivity is paramount to partially as well as fully autonomous vehicles.
“We believe that connectors for data connectivity make up about 10% of the total connector value per vehicle, and represent an attractive growth opportunity,” Mark Delaney told clients in his most recent research note.
The investment firm currently rates TE Connectivity shares at “buy”. Delaney has a price target of $184 on the NYSE-listed firm that indicates potential for another 13% gain from here.
TEL stock is worth owning to play the AV space also because they pay a healthy dividend yield of 1.73% at the time of writing, which makes them even more attractive to own for income investors.
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