We are initiating coverage of the LiDAR market and 6 companies within the industry. Light Detection and Ranging, or LiDAR, is expected to provide higher levels of autonomy in several applications. We believe OEMs have taken a larger interest in LiDAR, as the technology is capable of helping get to these next levels. We see a path for LiDAR companies to unlock a growing TAM.

Because LiDAR is still in its early stages, we do not believe the market will be a "winner-take-all" scenario, but instead, each technological choice / architecture can be used for different applications. While most LiDAR companies are focused on the automotive segment, as it presents the largest opportunity, LiDAR can be used in other applications such as robotics, smart cities, last mile deliver, and more.

We see a large opportunity for companies in this space, with an estimated LiDAR TAM growing from ~$3.5 billion in 2023 to ~$43 billion by 2030. We forecast a ~$35 billion TAM for automotive LiDAR in 2030 and an ~$8 billion TAM for non-automotive LiDAR in 2030. However, in order to realize the full TAM, LiDAR costs will have to come down significantly over the course of the decade.

As noted earlier, we do not believe the market is a "winner-take-all" scenario. In order to differentiate which companies will succeed in this market, we believe series production wins and opportunities for cost declines are the two biggest KPIs to track.

We are initiating coverage of Innoviz, Luminar, and Ouster with Buy ratings, Aeva and AEye with Hold ratings, and Velodyne with a Sell rating.

OUST

Ouster, Inc.

Semiconductors & Emerging Technologies

OUST - Cost Structure Execution Leads to Record GM; Reiterate Buy, $4 PT

Initiating Coverage of the LiDAR Industry