This is the best summation of Ouster's current position and future possibilities(TAMs) that I've come across. The article has some bolded words but I've bolded some sentences that I believe to be important.
There are other positive aspects not included in the article but, on the whole, substantial.
seekingalpha.com
Ouster: Stronger Lidar Signals
Aug. 29, 2025 1:00 PM ET Ouster, Inc. (OUST) Stock OUST
Stone Fox Capital
Investing Group Leader
Summary- Ouster has emerged as a domestic leader in Lidar, driven by robust non-automotive sales and consistent 30%+ growth.
- Customer adoption is accelerating, with pilots converting to large production orders and significant wins in smart infrastructure and robotics.
- Ouster's financials are strong, boasting 52% gross margins, limited cash burn, and a solid $229 million cash position.
- Despite recent stock gains, the stock's valuation at 6x 2027 sales remains attractive given its growth trajectory and the massive Lidar market opportunity ahead.
- This idea was discussed in more depth with members of my private investing community, Out Fox The Street. Learn More »
Just_Super/iStock via Getty Images
In a swift move, Ouster, Inc. (NASDAQ: OUST) has gone from a feared laggard in the Lidar sensor market to the clear leader now. The Physical AI company has long focused on the non-automotive market, and the push out of automotive deployments has played into this changed view. My investment thesis remains ultra Bullish on the stock, even after the run above $30.
 Source: Finviz
Ramping SalesA few weeks ago, Ouster reported Q2'25 sales grew a solid 30% to reach $35 million. A few years back, the amount wouldn't have seemed impressive, yet the company generating strong, consistent growth now is game-changing.
The whole sector has constantly promised a huge ramp in Lidar sensor sales, with projections going from a few test sensors to thousands and ultimately millions in cases of automotive markets. In Q2, Ouster finally saw an inflection point in Lidar sensors sold in the quarter, with a jump of 800 sequentially to a new high of 5,500.
- Q2 2025 - 5,500.
- Q1 2025 - 4,700.
- Q4 2024 - 4,800.
- Q3 2024 - 3,900.
- Q2 2024 - 4,000.
- Q1 2024 - 4,500.
- Q4 2023 - 4,100.
Just as important, the CEO again confirmed on the Q2'25 earnings call tons of customers shifting from test to production with a huge ramp-up in orders as follows:
Our ability to land and expand deals was a highlight during the quarter as we continue to convert customer pilots into large volume orders as they roll out deployments or move into production.
As constantly highlighted in prior research, Serve Robotics ( SERV) is a prime example of a customer going from less than 100 delivery robots in production to a goal of reaching 2,000 by year-end. The company isn't hitting any massive scale, but it did 10x the robots in production, needing the Rev7 Lidar sensors from Ouster.
The Ouster CEO even provided examples of a long-time customer currently deploying Gemini sensors at hundreds of facilities, now testing quadrupling the number of sensors per site. In another example, a Fortune 500 retailer is installing OSDome sensors in 500 locations across the globe. [Likely Apple(my comment)]
Even a deal with the Utah Department of Transportation didn't get much thought, but Ouster signed a similar deal with Chattanooga, TN, amounting to a $2 million contract. In Chattanooga, the company provided sensors for 120 traffic intersections in the downtown area, and Utah approaches the size of that deal with 100 intersections, while the total domestic opportunity tops 300,000.
The stock market can now focus on the large TAM opportunities, with the smart infrastructure business alone representing a $19 billion TAM by 2030. Aeva Tech.( AEVA) threw out similarly impressive numbers with a total TAM of $80 billion for the combined Lidar sensor market, with $10 billion assigned to Smart Infrastructure and another $5 billion for the Defense sector, where Ouster just got approved by the Blue UAS.
 Source: Ouster Q2'25 presentation
While the other Lidar companies chase $1+ billion automotive deals, Ouster keeps signing the multi-million dollar deals that are starting to add up to significant business.
Focus On The FutureThe key to the investment story is that investors can now focus on the goal of 30% to 50% annual growth with the potential for a major inflection point in the future. The fear in the prior years was that the Lidar sensor company would not make it to the ultimate inflection point.
Ouster guided to Q3 revenues of $35 to $38 million versus the $35 million just reported for the June quarter. The management team guided Q2 revenues of $32 to $35 million and reported slightly above the top-end, supporting an estimate for Q3 revenues actually hitting $38+ million.
Even as important, Ouster has quietly built an automotive business thanks to robotaxi customers, again outflanking an industry focused on the promises of massive deals with automotive OEMs now clearly last inline to implement Lidar in vehicles.
The current revenue story has forecasts for reaching $198 million next year and $282 million in 2027. If the company actually hits a 42% growth rate in 2027, the stock price will be much higher.
 Data by YCharts
Ouster has managed to produce 52% gross margins, while the rest of the Lidar industry is still generally reporting negative margins. The better financials have the company in a far better position to limit cash burn, setting up a stronger future.
The company has a robust balance sheet with $229 million of cash after wisely using an ATM to sell $59 million worth of stock in Q1. Ouster has only burned $6 million in cash from operations in the 1H and would appear to have limited needs to raise any additional funds, with further revenue growth producing the gross profits to eliminate cash burn.
The stock has rallied to a $1.8 billion market cap, but Ouster only trades at 6x the 2027 sales targets. The forecast is for the growth rates, which could lead to a higher multiple, not to mention an inflection point could occur with far higher growth rates.
Naturally, the risk is that Lidar sensors never gain major traction. Ouster is still producing a $6 million quarterly adjusted EBITDA loss, and a change to the growth story would change the valuation assigned to the stock that recently traded at only $7 in April.
TakeawayThe key investor takeaway is that Ouster continues to lead the domestic Lidar sector with solid results. The company continues to land lots of smaller deals that reduce the risk of major automotive deals with uncertain outcomes.
Ouster is no longer the really cheap bargain from a few months ago, but the valuation is still far below the opportunity, and Lidar remains on a path for a major inflection point.
If you'd like to learn more about how to best position yourself in under valued stocks mispriced by the market to end August, consider joining Out Fox The Street.
The service offers a model portfolio, daily updates, trade alerts and real-time chat. Sign up now for a risk-free 2-week trial to started finding the best stocks with potential to double and triple in the next few years.
This article was written by
Stone Fox Capital |
