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This Under-the-Radar Technology Stock Is Now a Home-Run AI Investment | The Motley Fool

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  Published in Science and Technology on Thursday, September 11th 2025 at 9:22 GMT by The Motley Fool
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The Under‑the‑Radar Tech Stock That’s a Home for the Future of Autonomous Vehicles

In a recent roundup of hidden gems, The Motley Fool spotlighted a small‑cap technology company that may be quietly steering the next wave of autonomous‑vehicle innovation. The article titled “This Under‑the‑Radar Technology Stock Is a Home” (published on September 11, 2025) shines a light on Velodyne Lidar, Inc. (ticker VLDR), a company that has become the de‑facto “home” for lidar technology—the laser‑based sensing system that powers self‑driving cars. While the stock has been largely overlooked by mainstream investors, the piece argues that the firm’s robust fundamentals, expanding market, and upcoming product milestones position it for meaningful upside over the next few years.

1. Company Snapshot

Velodyne, founded in 1983 and originally known for radar, re‑branded in 2016 as Velodyne Lidar to reflect its pivot to laser‑based sensing. Its flagship product, the Velarray series, delivers 360‑degree 3‑D imaging at up to 10 km range with high angular resolution—an essential capability for vehicle perception systems. The company supplies to OEMs (including Tesla, Ford, and Daimler) as well as Tier‑1 suppliers like Aurora and Mobileye.

• Market Cap (as of Sept 2025): ~$8.2 billion
• Revenue (FY2024): $650 million, up 18% YoY
• Gross Margin: 45% (improved from 40% a year ago)
• EBITDA: $120 million
• Operating Cash Flow: $110 million (positive for the first time in several quarters)

Velodyne’s website ([ velodynelidar.com ]) offers a clean overview of its product portfolio, recent contracts, and an active investor‑relations portal.

2. Why Lidar Matters

While much of the autonomous‑vehicle hype centers on computer vision and AI, the industry’s survival hinges on reliable perception hardware. Lidar gives vehicles centimeter‑level accuracy in detecting objects, crucial for high‑speed highway driving. According to an industry analyst report referenced in the article, the global lidar market is projected to grow from $2.5 billion in 2024 to $8.3 billion by 2029—a CAGR of ~30%.

Velodyne benefits from:

• Patent‑rich Design – The company holds over 300 U.S. patents covering its phased‑array and solid‑state lidar technologies, creating high entry barriers for competitors.
• Strategic Partnerships – Deals with Tier‑1 suppliers such as Autotalks and Aptiv have expanded Velodyne’s reach into the mainstream vehicle supply chain.
• Vertical Integration – Its in‑house manufacturing of key components (laser diodes, photodetectors) keeps unit costs low.

The article cites a recent 10‑K filing (link provided to the SEC) that confirms a signed supply agreement with Volkswagen Group for 1,000 units of the Velarray S‑Series, a contract expected to lift revenue in Q1 2026.

3. Recent Catalysts and Product Roadmap

3.1 2025 Product Launch – Velarray V4

In July 2025, Velodyne unveiled the Velarray V4, a next‑generation solid‑state lidar boasting a 20 km range, 2× higher resolution, and 50% lower power consumption. The company claims the V4 is now “ready for mass production.” Investors are watching this development closely, as the product could give Velodyne a decisive edge over rivals such as Luminar and Hesai.

3.2 Expansion into Industrial Automation

Beyond automotive, Velodyne is extending its lidar into industrial automation and smart‑city projects. The company secured a contract with a leading robotics manufacturer to provide lidar modules for warehouse robots. The article notes that this diversification could add $200 million to revenue by FY2027.

3.3 M&A Outlook

While Velodyne remains focused on organic growth, there is speculation that larger conglomerates (e.g., Honeywell or Bosch) may eye a takeover as they seek to consolidate lidar capabilities. The article argues that such an acquisition could bring a premium—potentially 30–40% above current price—if market sentiment shifts.

4. Financial Health and Valuation

A key theme in the article is that Velodyne’s valuation appears “comfortable” relative to peers. Using a simple price‑to‑sales (P/S) metric, Velodyne trades at a P/S of 12x, slightly above the sector average of 10x but well below the “bubble” levels seen in the high‑growth tech space (e.g., $25–30x).

• Dividend Policy – The firm has no dividend history and plans to reinvest earnings to scale production.
• Debt Profile – $300 million in long‑term debt, but the company maintains a debt‑to‑EBITDA ratio of 2.5x—manageable given its cash flow.
• Liquidity – Cash and short‑term investments total $500 million, providing a buffer against supply‑chain disruptions.

The article highlights a recent earnings call transcript (link to the call) where the CEO emphasized the company’s “scalable production” pipeline and “strong pipeline of orders” in the automotive sector.

5. Risks to Consider

As with any emerging tech stock, Velodyne faces several headwinds:

1. Competition from Vision‑Based Systems – Automotive OEMs may shift toward cheaper camera‑only perception in the mid‑term.
2. Supply‑Chain Constraints – The global semiconductor shortage could delay lidar manufacturing, squeezing margins.
3. Capital Expenditure Needs – Expanding production to meet the V4 demand will require a $200 million cap‑ex, potentially diluting shares if financed through equity.
4. Regulatory Risks – New safety standards for autonomous vehicles may impose stricter lidar performance requirements, increasing R&D costs.

The article provides a balanced view, stating that while these risks are real, Velodyne’s patents and existing contracts mitigate much of the upside potential.

6. Bottom Line: A Promising, Yet Uncertain Play

In conclusion, the Motley Fool piece argues that Velodyne is a “home” for lidar technology, combining strong fundamentals, a growing market, and recent product innovations that could unlock significant upside. While the stock trades at a moderate valuation, the company’s pipeline and strategic contracts position it to capitalize on the expanding autonomous‑vehicle industry.

Investors who are comfortable with a high‑growth, technology‑focused portfolio—and who appreciate a company that holds a solid moat in a niche but critical space—may find Velodyne worth adding. As always, due diligence is essential: review the latest SEC filings, monitor the progress of the V4 rollout, and keep an eye on any regulatory changes that could affect autonomous‑vehicle development.

Disclaimer: This article is a summary of a Motley Fool article and is not investment advice. Readers should conduct their own research and consult a qualified financial professional before making any investment decisions.