Aurora Innovation Inc (NASDAQ: AUR) has been turning heads this week, with a 14% jump in Monday's session that made it one of the day's top performers. It added to a rally that kicked off back in the summer of 2023 but has really been stretching its legs in recent months. The self-driving vehicle technology company's shares have gained nearly 300% since June and look likely to continue this run into the new year.
Aurora, headquartered in Pittsburgh, has been one of the most closely watched tech stocks in recent weeks, and with good reason. The $14 billion tech company is developing next-generation self-driving technology, focusing on autonomous trucks for commercial use. It's the kind of story that has captured the imagination of investors betting on the future of mobility. Let's jump in and take a closer look.
Aurora’s Recent Performance: Navigating Early-Stage Growth
To start with, it's worth noting Aurora's recent performance. A small miss on earnings at the end of October might seem like a hiccup, but it's worth remembering this is essentially a pre-revenue company. If you're getting involved here, it's for the stock's long-term potential rather than any backward-looking metrics.
As Chris Urmson, Aurora's co-founder and CEO, said in the report, Aurora is "on the brink of a new era in mobility and logistics." He also highlighted the addition of a new key customer and nearly $500 million to their balance sheet, along with a planned lane expansion into Phoenix.
Aurora is in a strong position to scale autonomous trucking, with a commercial launch now within sight. The groundwork for growth is being laid, and shares are clearly reflecting the optimism.
Why Analysts Are Bullish on Aurora Stock
Understandably, several analysts are bullish on Aurora's prospects, with Cantor Fitzgerald the most recent voice to join the bull's camp. In a note to clients last week, the team there initiated coverage with an Overweight rating and a price target of $10, pointing to a targeted upside of some 25% from Monday's close.
Cantor analyst Andres Sheppard highlighted Aurora's clear commercialization roadmap, its high-margin, asset-light model, and favorable regulation trends. He noted that the company has logged over two million supervised miles, with plans to deploy tens of driverless trucks by late 2025.
Sheppard projects Aurora's gross margins could exceed 50% by 2031, with minimal annual capex. Aurora's exclusive partnership with Continental further strengthens its ability to scale production starting in 2027. Favorable U.S. regulations, particularly in key states like Texas, where Aurora is initially launching, provide an added tailwind. With a $1 trillion U.S. trucking market and $4 trillion globally, Aurora's potential share is enormous, and investors are right to be excited.
Aurora’s Pre-Revenue Status Raises Investor Caution
However, for those of us thinking about getting involved, it's worth noting Aurora is still a pre-revenue business, and investors haven't forgotten that speculative moonshots like this were quick to fall out of favor in recent years. While Cantor's bullish call has grabbed attention, it's also the first major upgrade since September's update from Canaccord Genuity.
Since then, Aurora has picked up its fair share of Hold and Sell ratings, with many analysts taking a more cautious approach. The general consensus there is that they're waiting to see more of Aurora's potential materialize before fully committing. To justify this year's rally, Aurora will need to start 2025 on the front foot and demonstrate its ability to scale effectively.
Market Conditions Favor Growth Stocks Like Aurora
In the meantime, investors should look for the stock to continue riding its momentum, with technical indicators giving even more reasons to be optimistic. Aurora's Relative Strength Index (RSI) currently sits at 64, a level that signals bullish momentum without veering into overbought territory. That means there's still a ton of room to the upside for the stock to run.
Combine this with the broader risk-on sentiment sweeping markets and a dovish Fed, and growth stocks like Aurora stand out as compelling risk-reward opportunities. Don't be surprised if Cantor Fitzgerald is joined by more analysts in the bull camp before too long.