Goldman's advice on playing autonomous vehicles as catalysts approach this year

Goldman Sachs projects the U.S. autonomous vehicle (AV) rideshare market to reach $7 billion by 2030, representing 8% of the total market, driven by safety improvements and cost reductions. Analyst Mark Delaney highlights Tesla, anticipating its robotaxi debut in Austin, and TE Connectivity, which benefits from high-speed data connectivity needs in AVs, as key beneficiaries; while also noting that investor concerns regarding AV risks to companies like Lyft may be overblown given potential partnerships in the AV ecosystem.

Analysis

Goldman Sachs projects significant growth in the autonomous vehicle (AV) sector, estimating the U.S. AV rideshare market will reach $7 billion, constituting 8% of the total market, by 2030, driven by safety enhancements and declining operational costs. This outlook is underpinned by existing deployments, notably Waymo's (a division of Alphabet) fleet exceeding 1,500 robotaxis across four U.S. cities—San Francisco, Los Angeles, Phoenix, and Austin—with anticipated expansion to seven cities by the end of 2026, and an industry-wide forecast for over 35,000 commercial AVs by 2030. In terms of equity-specific insights, Tesla is poised for its robotaxi service debut in Austin with an initial 10 vehicles; however, Goldman Sachs maintains a neutral rating on TSLA stock, citing a "moderate" profit outlook and potential near-term scaling constraints due to geofencing and technology validation needs, despite recognizing long-term earnings uplift potential from its Full Self-Driving (FSD) and AV technology. Conversely, TE Connectivity (TEL) is assigned a buy rating with a $184 price target, implying over 13% upside from its recent $166 close, due to its critical role in supplying high-speed data connectivity components essential for AVs, noting that connectors for data connectivity represent about 10% of total connector value per vehicle; TEL shares have already appreciated nearly 14% year-to-date and offer a 1.75% dividend yield. Lyft (LYFT) also receives a buy rating with a $20 price target, indicating over 35% potential upside, as Goldman Sachs views investor apprehension about AV disruption as "more than already discounted" and foresees Lyft potentially benefiting from partnerships in demand generation and fleet management within the broader hybrid and AV ecosystem; LYFT stock has risen 31% in the past three months and 14% year-to-date.

Key Decisions for Investors

• Investors should evaluate exposure to the autonomous vehicle sector, considering Goldman Sachs' projection of a $7 billion U.S. AV rideshare market by 2030 and the increasing technological maturation evidenced by existing robotaxi services.
• Consider specific companies highlighted for AV exposure: TE Connectivity (TEL) is rated 'buy' for its critical component supply role with a 13% upside to its $184 price target, while Lyft (LYFT) is also rated 'buy' with a 35% upside to its $20 price target, as AV-related risks are perceived to be overly discounted.
• For Tesla (TSLA), maintain a balanced perspective; while its Austin robotaxi launch is anticipated and its FSD/AV technology presents long-term potential, Goldman Sachs' neutral rating reflects a more moderate near-term profit outlook and scaling challenges.
• Closely monitor key developments such as the expansion of Waymo's operations and the initial performance and scalability of Tesla's robotaxi service in Austin, as these will serve as crucial indicators for the AV market's growth trajectory and the validation of related investment theses.