Written by Ophir Gottlieb
PREFACE
Both Apple Inc. (NASDAQ:AAPL) and Alphabet Inc. (NASDAQ:GOOGL) cars are already in high demand, before they even exist.
STORY
Patrick Seits of IBD reported on polling data completed by Technalysis Research, and the results were rather staggering.
In a survey of 1,000 U.S. consumers who own a car and plan to purchase another within two years, the poll found that 17% of iPhone users would "definitely" buy an an Apple Car and 16% would give "serious consideration" to purchasing one. Whether or not Apple Inc. is in fact creating a car is still, sort of, up for debate, although the general consensus is that the iPhone maker is going into full automobile production.
On the other side, Alphabet Inc.'s Google has clearly stated that the company will not manufacture a car, but will rather build the self-driving technology behind it. IBD goes down the line of reviewing more poll results and the bottom lines came out like this:
"Among iPhone owners in the survey, 68% would either buy or consider buying an Apple car.
59% [responded that they would be] either buying or considering the purchase of a Google car."
Source: IBD
WHAT'S GOING ON
The real story behind these numbers goes much further than consumer intent. What we're really seeing here is that consumers are quite capable of seeing the tech giants as auto manufacturers, and further, even for products sight unseen, are quite willing to give the tech companies their trust for products that are measured in tens of thousands of dollars rather than hundreds. This is the worst possible scenario for traditional auto-makers that, as a whole do in fact, face the potential of getting lumped into a single category: "old."
If Apple Inc. (NASDAQ:AAPL) and Alphabet Inc. (NASDAQ:GOOGL) already have this much brand recognition in the fiercely competitive battle ground that is automotive sales, Detroit and Japan are in trouble. Throw a little Tesla Motors Inc. (NASDAQ:TSLA) love into the picture and all of a sudden a world where most of the cars are based on the major technology companies' brands becomes a possibility. Silicon Valley may have found its next big thing in a market that was once considered utterly impenetrable.
It's also an abrupt reminder that an investment in Apple and Alphabet (Google) is one in possibility. The narrative that the traditional auto-makers can compete with that is filled with a lot of hope, but perhaps not much else. Detroit and Japan are on notice as is the rest of the technology world. Here come Apple and Alphabet, and the consumers are coming with them. The author is long shares of Apple Inc. (NASDAQ:AAPL) and has no position in Alphabet Inc. (NASDAQ:GOOGL).
WHY THIS MATTERS
It turns out that the actual car manufacturers won't matter when it comes to the self-driving revolution. What matters are the smaller companies, the gems that power the artificial intelligence and deep learning that make self-driving possible. There are only a few of them, and one in particular is the undisputed leader. It has nearly unlimited upside and is one of just nine Spotlight Top Picks for CML Pro. It's identifying trends and companies like this that allows us to find the 'next Apple' or the 'next Google.' This is what CML Pro does. Our research sits side-by-side with Goldman Sachs, Morgan Stanley and the rest on professional terminals, but we are the anti-institution and break the information advantage the top .1% have.
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