The rise of autonomous driving cars is one of the hottest, most anticipated technology trends for the next decade.
Jefferies shared its top picks to ride the self-driving boom and other big car technology changes.
"We believe Delphi Automotive and BorgWarner remain best positioned to benefit from ongoing secular auto tech shifts," analyst David Kelley wrote in a note to clients Tuesday.
The analyst said Delphi is a key supplier that brings all the ADAS [advanced driver-assist systems] technologies together inside the car. He estimated the company's self-driving offering in the upcoming Audi A8 zFAS self-driving system will cost more than $1,200 per vehicle.
"DLPH's role as the system integrator, or enabler of sensor fusion, is key in our view. As a provider of vehicle architecture based system solutions, DLPH can package the vehicle's wiring and cabling with a fully integrated domain controller," he wrote. "They effectively take the component supplier's (such as MBLY's vision technology in the Audi A8) pre-processing and image analysis, and integrate it with the vehicle's path planning and policy and then ultimately enable actual vehicle control."
The analyst reiterated his $106 price target for Delphi, representing 17 percent upside from Monday's close.
Kelley is also bullish on BorgWarner's ability to gain share as the auto market moves to different powertrain technologies in the future.
"Incremental shift in electrification should also favor BWA given their turbocharger leadership and growing alternative powertrain portfolio," Kelley wrote. "With an electric motor and eBooster (electric turbocharger) platform and most recently the announced acquisition of Sevcon, a motor controller and battery charger supplier for electric/hybrid vehicles, we anticipate the powertrain supplier continues to outpace market growth."
The analyst reaffirmed his $50 price target for BorgWarner, representing 12 percent upside from Monday's close.
Delphi and BorgWarner have both outperformed the market this year. The shares rallied 34 percent and 13 percent respectively year to date through Monday versus the S&P 500's 10 percent return.