How Robotaxis, AI, and 170Mn Users Can Reinvent UBER Technologies Stock
The ride-hailing game used to revolve around one key factor: who could recruit enough human drivers to move passengers safely and efficiently at the right price. But in 2025, that narrative has shifted dramatically. In Austin, driverless white Jaguar I-PACEs now ferry Uber (UBER) riders without anyone behind the wheel. Just outside the city, Tesla is preparing to launch a fleet of camera-only robotaxis. Meanwhile, in London, start-up Wayve has gained regulatory approval to navigate the city's complex roads using 'embodied' AI. The race has moved from driver recruitment to deploying and managing autonomous fleets.
Confident Investing Starts Here:
Amid all this disruption, Uber has taken a surprisingly strategic—and perhaps underappreciated—approach. Rather than building its own sensors and hardware, it's leveraging its strengths: a massive user base, rich data, demand density, optimized routing, and a payments platform trusted by over 170 million users. That focus on core assets, while letting partners handle the hardware, is precisely why I still rate the stock a Buy.
Uber Earns the Right to Experiment
For years, Uber's financials felt like a rollercoaster—propped up by subsidies and weighed down by stock-based compensation. But Q1 2025 told a different story. Revenue rose 14% year-over-year to $11.5 billion, while adjusted EBITDA surged 35% to $1.9 billion. Even more impressive, both operating and free cash flow hit $2.3 billion, confirming that margin improvements are translating into real cash, not just accounting gains.
Just as important, Uber is no longer relying solely on ride-hailing. While Mobility still accounts for just over half of gross bookings, the other half now comes from Delivery, Freight, and a fast-growing advertising unit. That ad segment alone is running at a $1.5 billion annual pace after growing about 60% year-over-year, requiring virtually no additional capital. This diversification matters: it buffers Uber against economic swings in travel and commuting, while also funding autonomous tech partnerships without shareholder dilution.
Autonomous Excitement for UBER Shareholders
Waymo now operates around 100 fully electric Jaguars on the Uber platform in Austin—and according to both companies, those vehicles already complete more trips per day than 99% of the city's human drivers. Autonomy isn't just about cutting labor costs—it's about maximizing utilization beyond human limits. Drivers need breaks; robots don't. The math adds up fast, especially since Uber doesn't own or depreciate those sleek Jaguars—it simply collects a booking fee, while Alphabet picks up the hardware tab.
Competition, however, is heating up. Tesla is set to begin a limited rollout of driverless Model Ys on June 22, capitalizing on Texas's flexible regulatory stance.
Elon Musk has promised 'thousands' of robotaxis within a year, though federal regulators have already requested safety disclosures. Interestingly, this could actually benefit Uber. If Tesla underprices rides to stimulate adoption, overall trip demand increases, and Uber's algorithm is designed to route users to the vehicle that is cheaper or closer, regardless of who owns it. In that way, the platform profits from competitors' capital investments without having to match them.
Developers Need Uber
Uber's partner-first strategy is looking smarter with each passing quarter. Running a driverless fleet is massively capital-intensive—lidar systems alone can cost tens of thousands per vehicle, battery supplies are still tight, and companies need an entire depot network for charging and upkeep. Yet all that infrastructure is worthless if the cars are roaming without riders. In autonomous transport, the real bottleneck isn't hardware—it's passengers.
Uber already owns the most valuable asset in autonomous mobility: the passengers. Around 28 million trips happen on its platform every day. For any autonomy start-up, partnering with Uber instantly solves the 'cold start' problem—vehicles don't need to roam empty looking for riders. Instead, the app routes them directly to waiting customers. In return, Uber takes its cut, typically a high-teens to mid-twenties percentage of the fare, with zero added capital investment.
Layer on advertising, and the upside grows even more compelling. A captive rider staring at a screen in the back of a sleek, electric Jaguar is prime real estate for marketers. Equip those robotaxis with rear-seat displays, and the monetization potential accelerates. Even one ad per 10-minute ride could translate into billions in high-margin revenue by the end of the decade.
Plentiful Risks and Real-World Friction
As optimistic as the outlook may seem, none of this is a sure thing. A serious robotaxi accident could halt regulatory momentum, just as GM's Cruise experienced when one of its vehicles struck a pedestrian and lost its permits in California. Insurance costs in the U.S. remain steep compared to Uber's international markets, and litigation risk from aggressive plaintiffs' lawyers is always looming. Plus, if Tesla floods city centers with underpriced rides, Uber's take rate could shrink faster than trip volumes grow.
Still, Uber's diversified business model offers a buffer. Even if autonomous rollouts stall, the core business is now profitable on its own. And if pricing pressure intensifies, Uber can rely on its growing ad revenue, delivery upsells, and loyalty programs, such as Uber One, to help protect margins and maintain resilience.
Uber's Valuation
To put these possibilities into a valuation framework, I built a ten-year discounted cash flow model. I project that gross bookings will grow at an average annual rate of 15% through 2028, gradually slowing to 8% as urban markets mature. Adjusted EBITDA margins are expected to expand from the current ~11% to 18% by 2030, driven by a growing contribution from high-margin advertising and fee-based robotaxi services. Applying an 8% weighted average cost of capital and a 3% terminal growth rate, the model yields an estimated equity value of approximately $108 per share.
A couple of reality checks reinforce that result. At about 15x forward earnings, the stock trades at a discount to the S&P 500's 28x, despite better cash conversion. UBER's performance against its peers is also impressive, ranking highest on TipRanks' indicators and Smart Score.
What is the Prediction for UBER Stock?
On Wall Street, UBER stock carries a Strong Buy consensus rating based on 30 Buy, three Hold, and zero Sell ratings over the past three months. UBER's average stock price target of $99 implies approximately 15.5% upside potential over the next twelve months.
Uber's Autonomous Advantage and Robotaxi Economics
A few years ago, Uber's story hinged on whether part-time drivers could make city life more manageable without wiping out the company's margins. Today, the question has evolved: can removing drivers entirely push profitability to levels few envisioned back in 2017? Uber's decision to rent out its massive rider base to whichever autonomous platform proves safest and most cost-effective looks, for now, like the smartest, most capital-efficient move on the board. The company is generating sustainable profits, funding innovation through operating cash flow, and preserving the flexibility to pivot between partners or renegotiate terms as technology advances.
Autonomous taxis won't take over every city street overnight—but the real contest over who profits from them is already underway. And because Uber controls the demand side, it's positioned to earn economic rent, regardless of which lidar, camera, or neural net ultimately powers the vehicle. With shares still trading at traditional software multiples—ignoring the platform's optionality—I'm happy to stay in the back seat with my Buy rating, and let the algorithms do the driving.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Bloomberg
33 minutes ago
- Bloomberg
Tesla Set to Open India Showrooms in July With Made-in-China EVs
Tesla Inc. is set to open its first showrooms in India in July, people familiar with the discussions said, kicking off formal operations in the world's third-biggest automobile market as the Elon Musk-led firm hunts for growth amid falling sales in Europe and China. The electric vehicle giant's first set of cars have arrived in the country — Model Y rear-wheel drive SUVs shipped from Tesla's China factory, according to the people, who asked not to be identified as the information is private, as well as documents seen by Bloomberg News. The Model Y is the world's largest selling electric car.
Yahoo
35 minutes ago
- Yahoo
Texas Lawmakers Urge Tesla to Delay Robotaxi Launch in Austin Until New Law Takes Effect
A group of Democratic state lawmakers in Texas is urging Tesla (TSLA, Financials) to delay the rollout of its autonomous robotaxi service in Austin, citing pending state regulations set to take effect on Sept. 1, 2025. Warning! GuruFocus has detected 4 Warning Signs with NVDA. In a letter addressed to Tesla's director of field quality, Eddie Gates, seven members of the Austin delegation requested a delay, saying it would be in the interest of public safety and would help build trust in the company's operations. The lawmakers shared the letter publicly via social media. Under the new Texas law, operators of autonomous vehicles must first obtain authorization from the state Department of Motor Vehicles. To qualify, companies must demonstrate their vehicles can follow traffic laws, are insured and registered, meet federal standards, include recording systems, and can default to a minimal risk condition if the autonomous system fails. Tesla CEO Elon Musk previously said the company was tentatively targeting June 22 for the launch, but noted the team was being super paranoid about safety, and the timeline could shift. The robotaxi launch is a pivotal moment for Tesla, which has faced political scrutiny and stock volatility in recent months. Lawmakers asked Tesla to respond with evidence that its operations will meet the new legal requirements if it moves forward with the rollout this weekend. This article first appeared on GuruFocus.
Wall Street Journal
39 minutes ago
- Wall Street Journal
The U.S. Gave Up Its Lead in Clean Energy Sectors Before. It Might Be Doing It Again.
The U.S. is the world leader in clean hydrogen and carbon-capture production, but President Trump's move to roll back green-energy subsidies could mean giving up that position to rivals. It wouldn't be the first time the country has fallen from the top spot in the clean-energy sector. Right now, the U.S. is the unambiguous leader in just a few energy-transition technologies, said Julio Friedmann, chief scientist at Carbon Direct, a consulting firm focusing on decarbonization. 'We have surrendered leadership on EVs, on batteries, on wind and on nuclear,' Friedmann said, adding the U.S. was also once a key player in solar energy. 'In all these cases we had led significantly, and we abdicated that leadership.' The Manhattan Project played a crucial role in the advancement of nuclear energy. The first practical solar cell was developed by Bell Labs in the 50s. The first large-scale wind farm was built in California in the 80s. In the 90s, the U.S. led the world on electric-vehicle battery development—in 2008, Tesla made the first EV able to travel more than 200 miles. More recently, under the Biden administration, a combination of tax credits, subsidies and grants have helped the U.S. to take the lead in clean hydrogen and carbon capture, even as China remains the largest producer of clean energy overall. According to a study published last year by consulting firm group McKinsey & Co., North America is set to produce 52% of the world's clean hydrogen by 2030, while China is on course for 30%. When it comes to carbon capture and storage technology, nearly half of all projects are set to be based in North America by 2030, according to the International Energy Agency, with Europe next highest with 31% of projects. Most of the North American projects are in the U.S., largely in Republican States and counties. But over the past month, the Trump administration has set about rolling back Biden's incentives, canceling grants and removing tax credits that helped to spur production across the country. 'On their current course, the administration will again abdicate leadership,' Friedmann said. Last month, Energy Secretary Chris Wright moved to cut $3.7 billion of grants and subsidies authorized under the previous administration that were designed to get clean-energy projects off the ground. Those included a carbon capture and storage project in Indiana, plastics recycling projects in Texas and a green cement project in California. Under the 'Big Beautiful Bill' proposal, hydrogen tax credits are set to end by the end of the year and clean-energy tax credits face a de facto repeal for projects coming online next year and in 2027. The Trump administration said the technologies were costly, burdening ratepayers and consumers, calling the sector a scam. Gregory Nemet, author of the book 'How Solar Energy Became Cheap,' likened the current rollback to policies that were put in place by President Richard Nixon but rolled back in 1981 by President Ronald Reagan, when subsidies for solar were axed. The U.S. had been the leader in solar technologies, thanks to research from NASA. But withdrawal in government-led support meant the industry moved abroad, he said. 'That was the end of the line for the U.S. solar industry for quite a while. Japan picked it up, then Germany, then China,' Nemet said. Currently, China dominates production of solar equipment, making up nearly 75% of modules, 85% of cells and 97% of wafer production, according to data from the International Energy Agency. It is a similar situation in batteries, with 70% of all electric vehicle batteries ever produced coming from China. 'The main loss is the reset in market expectations,' Nemet added. 'There was a market for clean technologies that was huge and growing. If you were going to make a long-term investment based on long-term incentives, the last four years was meant to build that and this is a pretty big setback to those incentives.' For carbon capture and storage in particular, a number of startups like Climeworks, Heirloom and Air Products had looked to base their first-of-a-kind plants in the U.S. That was in part because of its favorable geography, including plentiful underground storage, but also because of the funding and research on offer at America's universities. 'The U.S. federal government began investing in technologies like direct air capture back in 2015, 2016, way before anyone else was thinking about this, and it really led in public investment and innovation,' said Giana Amador, executive director at the Carbon Removal Alliance, a non profit promoting carbon removals. She said this led to companies wanting 'to build their first-of-a-kind projects here, and doing so in partnership with the federal government and in particular the Department of Energy.' Amador pointed to programs like the 45Q tax credit, the carbon negative shot pilots program, and other policies that support carbon removal. But climate startups in the clean energy sector have already started to feel the effects of Trump's push against clean tech. Battery recycler Li-Cycle has filed for bankruptcy, while job cuts have been seen at direct air capture startups Climeworks and Heirloom. Meanwhile, Group14, a Seattle-based silicon-battery maker said it was delaying opening its battery factory in Moses Lake, Washington, due to uncertainty over Trump's tariffs. Share prices have fallen sharply too, with hydrogen startup Plug Power down about 50% this year. Industrial-gases supplier Air Products & Chemicals had planned to build a $4.5 billion hydrogen facility in Louisiana, but that project price tag has now ballooned to $8 billion, the construction timeline has slipped and the company is still seeking customers. Similarly, Nel Hydrogen has hit the brakes on a $400 million factory in suburban Detroit, due to policy uncertainty. 'This is an investment in the U.S. going forward and that's got to be in the mind of those who are making final decisions,' said Frank Wolak, president of the Fuel Cell and Hydrogen Energy Association. 'If we don't make this investment now, we will be looking at more and more Chinese and even European activities, and you won't be able to recover that ground. This is an investment in the U.S. future.' For local policymakers, the move to push back against green energy production has also resulted in thousands of job cuts. So far 45 announced projects have been canceled, closed or downsized resulting in 20,000 jobs being lost and $16.7 billion in investments abandoned according to environmental policy advocacy group E2. Of those, 72% of all jobs and 82% of investments were located in Republican congressional districts, E2 added. One of the other notable parts of the previous policy program was that it also had strong backing from fossil fuel, chemicals and other heavy polluting industries. The axed projects by Energy Secretary Wright included carbon capture and hydrogen proposals from Exxon Mobil, Eastman and Heidelberg Cement. 'With the current situation, the whole of this is in jeopardy,' said Sunita Satyapal, former Director of the U.S. DOE's hydrogen and fuel cell office. She said that in particular the 45V tax credit had made U.S. hydrogen production some of the cheapest in the world — an important driver in jump-starting the industry and encouraging industries to use the fuel source. 'Regardless of the technology, industry always needs a runway before take off and that is what subsidies provide.' Satyapal added that in the wake of the U.S.'s possible move away from the sector, regions like Canada and China could stand to benefit. China already makes up 65% of global electrolyser capacity, a key component in hydrogen production. Meanwhile, Canada's new Prime Minister Mark Carney has indicated supporting carbon capture projects tied with oil production. 'Companies are going to go where business is most favorable and I think that that in itself is a policy choice,' Carbon Removal Alliance's Amador said. 'The U.S. is at this critical window where we either continue to create a market and a policy environment that helps companies scale solutions here, or we give up that leadership and let other countries take the helm.' Write to Yusuf Khan at
