AEye Stock Up 3x Last Week, More To Come?

AEye stock (NASDAQ: LIDR) jumped by close to 50% on Friday, and is now up over 3x in just a week, following news of a partnership with AI semiconductor giant Nvidia. AEye develops adaptive LiDAR (light detection and ranging) systems used to enable advanced driver-assistance systems (ADAS) and autonomous vehicle capabilities. So why is this micro-cap Lidar company with trailing twelve-month revenue of just $246,000, and deep in the red, suddenly drawing this much investor attention?

Image by Cristian Ibarra from Pixabay

Tying Into Nvidia’s Ecosystem

AEye announced that its flagship Apollo lidar sensor has now been integrated into Nvidia’s DRIVE AGX offering, which is a widely used hardware and software platform designed to enable autonomous and semi-autonomous driving capabilities. DRIVE AGX serves as the computing backbone for many global automakers developing smart and self-driving vehicles, offering high-performance AI processing, sensor fusion, and real-time decision-making capabilities.

By integrating with this platform, AEye gains access to an influential and growing ecosystem of OEMs and Tier 1 suppliers working on autonomous vehicles, ranging from Level 2 driver-assistance systems to fully autonomous Level 5 vehicles. The partnership also helps AEye gain technical validation and visibility without having to independently spend heavily on sales or marketing, helping to reduce customer acquisition costs. As investors scan the AI landscape for the next breakout contender, could AI contender AMD see a lift ahead of earnings?

Risks Galore

There are several risks as well. AEye is still a very early stage company. It generated just $64,000 in revenue last quarter and total sales over the last 12 months declined 71% to just $240,000. This means that the stock trades at a massive price-to-sales ratio of 314x, in contrast with a 3.1x multiple for the S&P 500. Operating losses are deep, with a trailing operating loss of $32 million and no near-term line of sight to profitability. This high level of cash burn is a risk for the company. The Nvidia tie-up is promising, but it doesn’t guarantee commercial orders or long-term adoption since the deal is not exclusive, with Nvidia working with several other lidar partners. For now, the deal offers AEye access, but that could eventually translate into revenue. Investors chasing the rally should remain cautious as AEye is a highly volatile microcap stock with a market cap of just about $90 million.