Two leaders have emerged in autonomous-driving technology: Tesla and Alphabet. It’s helping both of their stocks.
Tesla plans to launch a self-driving robotaxi service at the end of 2025. Alphabet’s self-driving robotaxi company Waymo already operates in four cities — Phoenix, Los Angeles, San Francisco, and Austin — completing more than 150,000 self-driving taxi rides a week. It plans to launch a robotaxi service in Atlanta in 2025.
“We now model Waymo adding three cities in 2026 (Miami and two others), four in 2027, five in 2028, six in 2029, and seven in 2030,” wrote Morgan Stanley analyst Brian Nowak in a Monday evening report.
He sees Waymo recording one billion self-driving miles by the end of the decade. Through September 2024, Waymo had driven about 33 million miles with a passenger, but no human driver, in the car.
(Americans drive some 3 trillion miles annually.)
Autonomous cars can give drivers some of their time back, but the basis for self-driving tech, and its expansion, is improved safety. Through the 33 million miles, Waymo reported roughly 80% fewer injury-causing accidents compared with an equivalent human driver. That’s the difference between about 125 accidents involving human drivers and about 27 involving the self-driving robotaxi.
Nowak’s billion-miles estimate implies 125 million trips with some 23,000 robotaxis operating by 2030 to support the growing demand. Waymo has about 1,000 robotaxis in operation.
Things can turn out better than that. Better artificial-intelligence computing, access to airports and highways, adding cities faster than expected, and higher-than-expected demand in existing city operations represent “four key catalysts going forward.”
Nowak rates Alphabet stock at Buy with a $215 price target.
Overall, 80% of analysts covering Alphabet stock have Buy ratings, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Alphabet stock is about $210 .
Nowak doesn’t cover Tesla stock. Adam Jonas covers Tesla for Morgan Stanley, and rates shares at Buy with a $430 price target. Self-driving technology accounts for more than half of Jonas’ valuation. He models about 660 million self-driving miles logged by Tesla vehicles from now until 2030.
Alphabet stock was 1.4% in midday trading Tuesday at $198.69, while the S&P 500 and Dow Jones Industrial Average were up about 0.3% and 0.6%, respectively.
Barron’s recently wrote positively about Alphabet stock, believing it was an AI technology winner. Since the article appeared in late November, shares have gained roughly 21%, through midday trading Tuesday, while the S&P 500 has added about 1%.