Ouster has emerged as a leader in the market for lidar sensors, as demand for the laser-based vision technology finally takes off after years of promise. Ouster stock has surged this year as customers move from trials to implementation.
Ouster plays a key role in the physical AI trend, providing artificial intelligence for vehicles, robots and other devices on the edge of networks. Lidar, short for "light detection and ranging," allows those devices to see the world by creating 3D maps of environments.
Ouster Stock Benefits From The Rise Of Lidar
"Literally every moving machine on earth is going to be automated or semi-automated in the future, and all those machines need lidar to provide them eyesight," Chief Executive Angus Pacala told Investor's Business Daily.
Late Thursday, Ouster beat revenue expectations for the second quarter. The San Francisco-based company said revenue increased 30% year over year to $35 million, beating Wall Street's target of $33.8 million.
For the third quarter of 2025, Ouster forecast revenue of $36.5 million, based on the midpoint of its guidance. That would represent an increase of 30% over the year-ago quarter.
In the second quarter, the company shipped more than 5,500 lidar sensors, a record number.
On the stock market today, Ouster stock surged 11.7% to close at 25.80. Earlier in the session, it was up more than 42% to 32.95.
Publicly traded since March 2021, Ouster has yet to turn a profit as it works to develop the market for lidar sensors across autonomous vehicles, industrial robots and other applications. In the June-ended quarter, Ouster reported an adjusted loss of $5.5 million, an improvement over the year-earlier adjusted loss of $10.5 million.
Ouster was among a flurry of lidar companies to go public at the start of the decade. Some didn't make it. And those that did saw their shares laid low in the years that followed. In February 2023, Ouster merged with rival Velodyne Lidar.
Focused On Multiple Lidar Applications
Ouster survived by pursuing a diversity of applications for lidar, rather than just focusing on self-driving cars and robotaxis as rivals did, Pacala said.
"Ouster's big strategic bet was that autonomy and physical AI are things that apply across industries," Pacala said.
Other companies took an automotive-first approach and are still waiting for that market to develop, he said.
The markets currently driving lidar sales are industrial and smart city applications, Pacala said. Ouster provides lidar sensors for heavy equipment, such as mining trucks and farm tractors, as well as for traffic management in cities.
Ouster's 'Bread-And-Butter Vertical'
"The biggest vertical for us in the last quarter was industrial," Pacala said. "That really is our bread-and-butter vertical."
The industrial market includes automated forklifts, agricultural vehicles and mining machines. In May, industrial giant Komatsu announced Ouster as its lidar supplier for autonomous mining equipment.
"There's a million or so tractors sold every year. There are over a million forklifts sold every year around the world. These are big numbers, big industries that are comparable or bigger than major automakers in scale and unit quantities," Pacala said. And some industrial trucks can have as many as 10 lidar sensors each.
Another major market for Ouster is the smart infrastructure segment. That includes the company's BlueCity traffic control systems. They use fixed-position lidar sensors at intersections to manage traffic and provide data for safety improvements.
"There are over 300,000 signalized intersections in North America. So there's an immense opportunity to just upgrade our nation's transportation infrastructure with this technology," Pacala said. In Chattanooga, Tenn., Ouster is installing the largest lidar-powered smart traffic network in the U.S.
Ouster Stock Gets Price-Target Hikes
Ouster uses contract manufacturers Benchmark Electronics and Fabrinet to make its hardware. Those companies have production facilities in Thailand, so Ouster faces U.S. tariffs on imports. Production could shift to the U.S. at some point, Pacala said.
Fortune Business Insights predicts that the lidar market will generate revenue of $3.01 billion this year, up 14% from 2024. The research firm sees the lidar market reaching $9.68 billion in sales in 2032.
Other companies in the lidar market include Luminar Technologies, China's Hesai Group and Israel's Innoviz Technologies.
Rosenblatt Securities analyst Kevin Garrigan reiterated his buy rating on Ouster stock after the company's second-quarter report. He also raised his price target to 35 from 17.
Ouster's recent design wins and its business pipeline are giving investors increasing confidence in the company's ability to achieve its quarterly revenue growth target of 30% to 50% year over year through at least fiscal 2026, Garrigan said in a client note.
Oppenheimer analyst Colin Rusch maintained his outperform rating on Ouster stock and upped his price target to 35 from 34.
"We believe the company is not only leveraging its leading hardware solutions, but seeing the benefits for its sensor fusion capabilities," Rusch said in a client note.
Ouster stock is on the IBD 50 list.
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