Is Ouster, Inc. (OUST) A Good Stock To Buy Now?

Is OUST a good stock to buy? We came across a bullish thesis on Ouster, Inc. on ARMR Report Be The Smart Money’s Substack by Bret Rosenthal. In this article, we will summarize the bulls’ thesis on OUST. Ouster, Inc.’s share was trading at $ 44.93 as of June 1^st.

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Ouster, Inc. engages in the production and sale of lidar sensor kits for the automotive, industrial, robotics, and smart infrastructure industries in the Americas and internationally. OUST is emerging as a differentiated play on the physical AI infrastructure buildout, with the investment thesis centered on the market’s continued misclassification of the company as a commoditized lidar hardware vendor rather than a scalable spatial intelligence platform.

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Unlike legacy lidar providers that rely on complex analog architectures and remain dependent on the delayed autonomous vehicle market, Ouster has developed a digital solid-state architecture that places lasers and detectors onto CMOS silicon chips, allowing its products to benefit from the cost reductions and performance improvements associated with semiconductor scaling. This approach enables lower manufacturing costs, higher reliability, and improved scalability while avoiding heavy capital requirements through outsourced fabrication.

Beyond hardware, Ouster is increasingly focused on its Gemini perception software platform, which transforms raw 3D sensor data into actionable analytics for robotics, warehouse automation, smart infrastructure, and edge AI applications. The software opportunity is particularly important because it introduces recurring, higher-margin revenue streams that could support a valuation rerating from a hardware multiple toward a software-oriented multiple. The company has already expanded margins following the Velodyne acquisition and integration, while management continues to streamline costs and pursue positive free cash flow.

Ouster’s strategy targets industrial automation, logistics, and smart infrastructure markets where labor shortages, reshoring trends, and productivity requirements create compelling returns on investment for customers. The Velodyne acquisition also strengthened Ouster’s intellectual property portfolio and competitive positioning, while increasing geopolitical scrutiny of Chinese technology providers may further benefit domestic suppliers.

The bullish case centers on accelerating software adoption, expanding infrastructure spending, market share gains, and successful execution toward free cash flow generation, which together could significantly expand Ouster’s addressable market and position it as a foundational provider of machine vision technology within the rapidly growing physical AI ecosystem.

Previously, we covered a bullish thesis on Amphenol Corporation (APH) by TMTMoats in March 2025, which highlighted the company’s diversified end-market exposure, acquisition-driven growth, and opportunities from AI infrastructure and electric vehicle adoption. APH’s stock price has appreciated by approximately 132.91% since our coverage. Bret Rosenthal shares a similar view but emphasizes Ouster’s digital lidar architecture, software-driven margin expansion, and its role as a foundational machine vision platform for physical AI infrastructure.

Ouster, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held OUST at the end of the first quarter which was 23 in the previous quarter. While we acknowledge the risk and potential of OUST as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than OUST and that has 10,000% upside potential, check out our report about this cheapest AI stock.

Disclosure: None.