Why Pony AI Is Winning the Artificial Intelligence Race Today

Pony AI (NASDAQ: PONY) stock is off to the races again.

The small-cap Chinese robotaxi and robotruck company, which surged more than 30% yesterday after announcing it has developed three new robotaxi models with partners Beijing Automotive, Guangzhou Automobile, and Toyota Motor, galloped ahead a further 27.6% through 10:25 a.m. ET this morning.

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Much of today's gain can be attributed to yesterday's news, but there's a new development as well. The Fly is reporting this morning that Pony has picked a local partner, Hesai Group, to supply it with AT128 lidar sensors to help its new robotaxis see better.

As you can probably guess, Hesai stock is moving higher today as well, up 6.1%.

How significant is this news?

Honestly, I don't think today's news is quite as big a deal as the stock price suggests -- well, not for Pony AI at least. It's certainly good news for Hesai.

For Pony, though, the big developments are still that Pony is now on the seventh iteration of its autonomous driving system, that it possesses an "automotive-grade autonomous driving kit" (which can presumably be licensed for use by other automakers, generating additional revenue), and that the company has cut the input costs of building its kit by 70%.

Plus, you know, the fact that it's got the world's biggest carmaker by sales, Toyota, as a partner.

Is Pony AI stock a buy?

All this said, however, there's one thing Pony doesn't have, and that's profits.

With $75 million in trailing revenue, Pony lost $274 million last year, and is still burning cash. The good news is that Pony has cash to burn -- about $745 million of the stuff -- which may or may not be enough to keep the company going to a point where it can support itself with internal free cash flow.

Wall Street analysts don't see that happening before 2029, however. For the time being, Pony AI remains a speculative stock. If you must buy, buy small, and don't chase this stock higher until you know for sure this start-up will survive.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.