GOOGL's Waymo is the most credible/de-risked US robotaxi play; it is an interesting but speculative growth driver given current losses and opaque reporting.

Well, you know, you can't have a conversation about autonomy without talking about Alphabet and Waymo, right? I mean, there's just no way. And so, I had to bring, uh, Alphabet to the table.

You know, Waymo has really emerged so far as the kind of clear operational leader in commercial fully driverless ride hailing, um, particularly, of course, in the US. You know, this is a real revenue generating business that's operating in a meaningful scale.

Now, bear in mind if you're an Alphabet shareholder like I am, they still report Waymo inside the tiny other bets business. They are not breaking it out separately at this point, and I wouldn't expect that to happen anytime soon.

So, other bets posted $382 million in revenue in the second quarter. That was only up single digits year-over-year. This also is a tiny portion of Alphabet's total revenue base, under half a percent.

And, you know, under US accounting rules, Alphabet actually isn't required to break Waymo out separately until it crosses a materiality bar that it's it's not near yet. So, be aware of that if you're trying to follow some of the numbers.

A lot of the data that we have about Waymo and its growth is coming from a lot of, you know, third-party sources that are closely tracking Waymo's progress. So, there was a third-party research firm that estimated, called Sacra, that estimated that Waymo's annualized revenue run rate hit $355 million earlier this year.

And that was up from about 125 million just about a year prior. So, essentially near tripling.

You know, they estimate that average revenue per Waymo ride is around 15 to 17. That's about 15% below Uber and Lyft in overlapping markets.

But, we've also seen that Waymo's paid rides have grown from about 200,000 weekly paid rides in early 2025 to somewhere around 500, 600,000 weekly rides. And Waymo's management's targeting more than a million weekly rides by the end of the year.

And if you're following this space, you're following this company, you know that Waymo has vastly scaled its footprint in a relatively short period of time. They're operating fully driverless rides in about a dozen major US metro areas.

This includes, you know, Phoenix, San Francisco, LA, Austin, Atlanta. The list goes on. They've also got, you know, testing or even limited service in about 21 additional cities.

They're running international tests in cities like London and Tokyo.

There was also an announcement that California's Public Utilities Commission cleared Waymo in late August to expand across 18 California counties. That is a significant regulatory unlock for Waymo in its home state.

The safety piece, you know, we were talking about that earlier with Tesla. This is really important. There's independent safety reporting that is showing a 90% reduction in serious injury crashes compared to human-driven vehicles across Waymo's operating history.

And that, I think, is incredibly important to any long-term investment case here.

You know, obviously, if you're an Alphabet shareholder, you're probably owning them for the search business, the advertising angle, the cloud computing business, their growth in, you know, their TPUs.

But the Waymo piece is interesting even if it's not the biggest part of their revenue base.

Now, one thing to note, we know that Waymo is still burning significant cash. Uh there was some independent analyst modeling that came out from a company called Future Search that estimates that Waymo lost about $2 billion in Q1 of this year, just under $2 billion in Q2.

So, that's about $4 billion in losses through the first half of the year. So, this is not a part of the business that's anywhere close to profitable yet, but it's an interesting, if not more speculative, part of Alphabet's overall growth story.

You know, one final note I'll make, Waymo actually closed an external funding round earlier this year. It was led by, you know, Dragoneer, DST Global, and Sequoia. Obviously, Alphabet contributed the majority of the round.

So, the valuation of Waymo can stand anywhere between 110 billion and 126 billion at the time we're recording this video.

And Morgan Stanley has said that Waymo could be reaching at least $2.5 billion in annualized revenue by 2030. So, you know, if you're an investor in Alphabet, you're exposed to this business, of course, like I am, but it's a really interesting part of the company.

Um and as we, you know, don't have a lot of the direct reporting from Alphabet directly, we are seeing these numbers come out from a lot of independent monitors. It's a fascinating part of the business to watch.

Yeah, Rachel. I mean, obviously owning Alphabet is always for me one of the good things. It's It's I mean, it's a company affecting in everything in the AI.

What I'm thinking here I and this is just random thoughts with Waymo. It's like in the future when AI starts to get integrated with it, how does Waymo I I feel like Google and Alphabet would have some form of strength having kind of all this data about me in in per se.

It's like let's say if I order a Waymo and it knows that at 9:00 I always order this special drink from Starbucks or from or from Dunkin' Donuts or wherever. Uh I wonder how it can kind of integrate that into this whole autonomous world.

Uh so it seems like I mean, with the data um and obviously autonomous solutions, uh this could be extremely extremely big uh in the future for for Alphabet.

Yeah, absolutely. And I mean, already their their autonomous system Waymo driver, you know, obviously relies heavily on advanced machine learning and and neural networks to process real-time sensor data.

They Waymo's developed its own in-house custom AI chips to handle the heavy workloads for the robo-taxis. And of course, it integrates Google technology. The you know, Gemini AI assistant as well as an in-vehicle interface for riders.

So you're seeing a lot of overlap between Alphabet's core products and then Waymo, which is certainly kind of the more speculative part of the business.

And I'll note, you know, Waymo is obviously not without competition. We We've seen obviously Tesla and Uber have separately secured permits tied to robo-taxi operations in some of the key overlapping markets like Vegas and China.

If we go across the world, Baidu's Apollo Go is running driverless service across dozens of cities. They've delivered millions of fully driverless rides so far.

I ultimately I think this is a space where multiple players can win. And when we're looking in, you know, North America specifically in the US, Waymo so far has emerged as the single most credible more de-risked way to play the autonomous ride-hailing space.

I expect that that dynamic will continue to shift and develop as more players and their technology improves.