Already, most new cars are equipped with blind spot sensors, lane departure warning systems, automated parallel parking systems and adaptive cruise control.
“Do you think we’ll need to learn to drive a car?” my son asked me recently.
For the last few years, I’ve been telling my kids about self-driving cars. And they are always asking me if we can buy one or if they can at least take a ride in one.
Now, some people believe that self-driving cars are, at best, still 20 years away. These people believe that self-driving cars are like some bad science-fiction fantasy … and even if they come true, they will be a failure.
However, they’re wrong. Technological developments in the self-driving car revolution are rapidly picking up speed. Just recently there were two major announcements that sent stocks associated with self-driving cars soaring higher. Some of the best-performing stocks over the last two years are stocks that are related to self-driving cars.
And the best part? The biggest gains for these stocks still lie ahead…
Which means that it’s very unlikely my son is going to ever need to learn how to drive a car.
The Car of the Future
Already, most new cars are equipped with blind spot sensors, lane departure warning systems, automated parallel parking systems and adaptive cruise control. And each year, more and more systems are implemented that make driving a more passive activity.
Thus far, all of these developments still require you to keep your eyes on the road and your hands on the wheel … but that’s about to change in a big way.
This major shift is that regular carmakers are now getting on board.
For example, in March 2016, General Motors (GM) spent $1 billion to buy a self-driving car startup called Cruise Automation.
By December 2016, GM had begun publicly testing its self-driving car, and it’s now testing the car in Michigan.
On Friday, Ford spent $1 billion on a self-driving car startup called Argo AI.
In the second half of 2017, BMW plans to have 40 completely autonomous cars in public testing.
What’s going on is a race to get the first self-driving car into the hands of consumers. And the reason for that is because the old-line car companies realize that if they don’t have a self-driving car ready, they are likely to be wiped out.
And by wiped out, I mean that they would have severe financial difficulties and be on the road to bankruptcy.
That’s why I told you in an earlier article that betting on car companies like GM and Ford is risky.
The Smart Play
Semiconductor stocks such as the VanEck Vectors Semiconductor ETF (NYSEARCA: SMH) are going to benefit from the huge number of computer chips and sensors that will be put into these self-driving cars. This exchange-traded fund (ETF) that I’ve been recommending to you since June 2016 is up 84% over the last three years.
And companies that make the computer hardware for self-driving cars are already seeing massive gains. For example, Nvidia Corp. (NYSE: NVDA) is up an incredible 558% in the last three years.
The self-driving car, without question, represents one of the most enormous opportunities for investors in the industrial Internet of Things (IoT) mega trend. But the truth is, self-driving cars are only some of the 50 billion devices that are going to be connected to the Internet.
That’s why I believe the smart play is to invest in the makers of the guts of self-driving cars. They’re safer bets that are going to generate more returns than the automakers.
The industrial IoT is the part of the IoT mega trend that is truly setting up to generate absolutely mind-boggling stock market winners. And with stocks like Nvidia, we’re already getting a taste of what winners in the industrial IoT are going to look like.