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Since last December, Waymo has said it's on a path to giving 1 million fully autonomous rides a week by the end of 2026. With under three months left in the year, the latest weekly count the company has shared is around half that.
This doesn't change my take on the stock. Alphabet (NASDAQ:GOOGL)(NASDAQ:GOOG) is worth around $4.2 trillion, and most of that value rests on Google Search, YouTube, and Google Cloud.
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Waymo, arguably the leader in paid driverless rides, comes along as a relatively small extra. And I think that's exactly what makes the Google parent a better way to own the robotaxi build-out now than Tesla (NASDAQ:TSLA) or Uber (NYSE:UBER).
Image source: Getty Images. Image source: Getty Images.
Waymo's ride count has grown fast. In early February, when it announced a $16 billion funding round, Waymo said it was giving over 400,000 rides each week. Then, on Alphabet's first-quarter earnings call in late April, CEO Sundar Pichai said Waymo had topped 500,000 fully autonomous rides per week, "doubling in less than a year."
The next stage of growth hinges on new cities. Waymo opened its service to everyone in Dallas in early August and in Houston later that month, after starting both cities with riders from an interest list in February. Then in September, it began serving its first public riders in Denver, San Diego, and Tampa, followed by Las Vegas on Sept. 14.
Still, hitting 1 million a week by Dec. 31 would mean cramming the next doubling into around eight months. Waymo also hasn't shared a larger weekly tally since spring.
I think there's a good chance it falls short of its own target this year. But that might not matter much for Alphabet shareholders.
Investors in Waymo's February round valued it at $126 billion once the new money came in. Against Alphabet's market value, Waymo's price tag is about 3%. Even if Waymo's value doubled from there, it'd still be a single-digit slice of the whole company.
The cost shows up in Alphabet's Other Bets segment, which gets its revenue mainly from driverless rides and internet services. Showing how much Alphabet is investing to grow Waymo, Other Bets' operating loss widened to $1.8 billion in the second quarter of 2026 from about $1.2 billion in the year-ago quarter. That was down from a $2.1 billion loss in the first quarter, but losses have still climbed over the last year as Waymo adds cities. Alphabet's total operating income, in comparison, was $40.8 billion for the second quarter, up 30% from a year earlier.
In other words, Google's main businesses are covering Waymo's losses many times over.
Alphabet's trailing earnings are inflated now by gains on its investment portfolio, so forward earnings (using analysts' estimates for next year) are the better measure. On that basis, shares trade at about 23 times earnings.
I'd say 23 times earnings is a fair price for a business whose operating income is rising so fast.
Tesla is pushing hard into robotaxis, too. Its Robotaxi service is live in seven major metro areas, according to its second-quarter update, and the company began producing its steering-wheel-free Cybercab.
But Tesla's second-quarter operating income was only about $400 million, and the stock trades at about 165 times forward earnings. With Tesla, self-driving may need to justify much of the share price. With Alphabet, it's an extra.
Uber Technologies is the cheaper stock, at around 15 times forward earnings -- and its business is doing well. Gross bookings (the total value of rides and orders on its platform) climbed 24% year over year to $58 billion in the second quarter.
Uber doesn't own the driving tech, though. CEO Dara Khosrowshahi says Uber is building "the world's largest platform for autonomous vehicles," so its robotaxi upside might rest on companies like Waymo sending rides its way.
And in its latest quarterly filing, Uber counts Waymo among the companies that compete with it or may compete with it. The filing says that Waymo runs a ride-hailing fleet on its own platform and through Uber's.
Is Alphabet the robotaxi stock to buy? I think so. Waymo is already giving hundreds of thousands of rides a week, its losses are easily covered, and Alphabet shareholders aren't paying much of a premium for it. I'd consider buying Alphabet shares here as a way to get robotaxi exposure without betting a whole position on it.
Of course, Waymo could well miss its 1 million goal. But at this price, I don't think Alphabet's stock needs it to reach that mark.
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Daniel Sparks has clients with positions in Tesla. The Motley Fool has positions in and recommends Alphabet and Tesla. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.
Alphabet Is the Robotaxi Stock to Buy as Waymo Chases 1 Million Rides a Week was originally published by The Motley Fool
