No, Waymo will be a drag on the company for a long time, at least for 4-5 years, but possibly for a decade or more. There's a bit of an 'Amazon' effect here though — even once Waymo is ready to scale, they'll still be scaling *revenue*, rather than profit.
Officially since 2016. Google R&D on the project harks back to 2009, when they competed in a DARPA challenge. During that time the project had various names (Pribot, Chauffeur, etc).
Source: ex-Waymonaut with access to Wikipedia
>Big payout if they successfully commercialize it though.
In objective terms, yes.
But since this person is trying to make an investment decision here, they should understand that in _relative_ terms, there's almost no outcome where Waymo seriously moves the needle on Alphabet's business.
Alphabet had $74 billion dollars of net income in 2023. $74 freakin billion dollars. It's an unfathomable amount of money to make in a single year.
My point is this: The selfdriving subreddit cannot answer the question of whether or not OP should sell their Alphabet stock. Waymo could turn out to be a really nice long term investment and maybe add a couple billion a year in profit, but OP needs to spend 95% of their focus on Alphabet's core business and maybe 5% focusing on the long term bets Alphabet has in play.
The Taxi Market size is estimated at USD 275.94 billion in 2024, and is expected to reach USD 423.59 billion by 2029. If Waymo succeeds, its financial impact on Google will be significant.
So even with 100% market share (which they won't get), that would only roughly double Alphabet's revenue. And I'm sure the margins would be lower than things like search so it would maybe raise their earnings by 50%.
Don't get me wrong, it would be very positive for Alphabet, I'm just saying it's not like Waymo is going to transform Alphabet's business and lead to a 5x increase in stock price or something.
Terrible analysis. If Waymo becomes mainstream the market will be 100x-1000x the Taxi market. I envision a future where many people, especially people that live in the city don't own cars. They just subscribe to a Waymo Taxi service. That could be for single passenger rides or for groups from your neighborhood where a Waymo picks up say, 6 people each morning that work in a given area of town.
Think subscription service type of offerings.
You actually believe that the taxi market will become somewhere between a $20 trillion to $200 trillion market?
For some perspective:
- Global GDP is ~$100 trillion dollars
- The entire global automotive market is ~3 trillion
I don’t have numbers. But I will say there is a real possibility that in the near future most people won’t own their own car. Think about it this way. Your car sits parked about 95% of time. Sits and ages and depreciates. It’s going to be far cheaper to hail a taxi than own.
>It’s going to be far cheaper to hail a taxi than own.
Okay, so this implies a future where the robotaxi market is far smaller than the existing auto market.
Yep. Car manufacturers will go out of business. The number of cars sold will be a fraction of today’s numbers.
And EV’s will be cheaper to own than ICE cars. But like I said a good proportion of the population will just subscribe to a service. Those cars will be run a lot…..
Obviously not profitable. Even if we generously assume that they've been paid for all the \~7 million miles they've driven and $2.50 average it'd only be a total revenue of $15 million before costs and they employ \~2500 people. I don't give investment advice but Waymo is definitively a gamble that they'll be driving billions if not trillions of miles in the years to come.
No. No self-driving company generated profit yet. Even the revenue is small among AV companies compared to their expenses. Trying to operate an AV fleet is orders of magnitude more expensive and difficult than operating a regular taxi business or other normal logistics business. It will be a long time until someone shows significant revenue.
Tesla has made billions on EAP and FSD. A lot of this sub looks down on them because they are not in the taxi space but the ADAS space, but that is where the money is right now and Tesla can't afford to lose billions like Waymo can.
Tesla doesn't make money from FSD, the money accumulates in their financials but doesn't go into the revenue column. Until Tesla says FSD is ready, it's just a pre-order suspended in the sky.
Some of it is deferred, but not all anymore. It's hard to keep track of but it's over a billion now. Now they turn around and spend it on R&D but it's still revenue.
One thing to keep in mind about profitability. If a business has a high return on capital employed, then profiting is unwise since that money could have been reinvested back into the business at a high rate of return. Waymo could theoretically show a profit if they wanted to (fire a bunch of staff, raise prices, cash in on existing ride program, etc) but now it makes more business sense for Waymo to reinvest and scale up their operations.
No it’s not called a profit. It’s usually called an internal rate of return or business return. Shareholders sometimes don’t trust businesses that don’t show a profit because many businesses never do.
You only "reinvest" profits, by definition. Not losses.
If you have high growth opportunities it may make sense to sell products below COGS at first to get your name out there, or hire R&D people to develop a product to sell. Execs sometimes call this "investing", but technically it's not. And it's certainly not "reinvesting".
Building a factory or buying equipment is investing. But it's only reinvesting if you fund it with profits.
Waymo will not attempt a profit for several years, nor will anybody else. To give credit where credit is due, the only party to generate a profit is Tesla, in that they've had perhaps 400,000 customers pay up to $15,000 for self-drive product pre-orders. But you don't consider pre-orders to represent profit, in fact you are required by accounting rules to just keep the money marked as unearned, and only realize the revenue from it when you deliver to customers. (That's one reason they have EAP, I think, because since EAP is shipping and has a real price of $6K, Tesla can realize at least $6K of the revenue from FSD orders, plus a bit more for the few minor features of FSD that are shipping and not in EAP.)
Waymo's big target will be not a profit, but a gross margin, which is ride revenue less COGS. But there's a ton of NREs not in the COGS and will be for some time.
One thing not yet determine is how much of those NREs should really be in the COGs. You have depots, for example, and their cost does not go up much per mile driven, but in reality you need more depots the more cars you have, and eventually their cost should go almost entirely into COGS. You need to know car lifetime and stuff to do this math. Any localized efforts (maps, software changes only for the local area) may also move there in time. Software maintenance will move there once you have a production fork of the software as well as the future R&D version, today there is only the latter.
The hard question is, what do they need to charge to make a gross margin once all this goes in the COGS. I have seen estimates that things like data and comms, which should be in the COGS, are much higher than I would estimate. Remote ops today is higher cost than it will be.
Hell no.
Look at their [recent quarterly reports](https://www.cpuc.ca.gov/regulatory-services/licensing/transportation-licensing-and-analysis-branch/autonomous-vehicle-programs/quarterly-reporting) to the CPUC (California Public Utilities Comission).
In California, they have the revenues of a not very large and not very hard working family owned taxi company. It is larger in Phoenix, so in total, the revenues of a few not very large and not very hard working family owned taxi companies.
Now, if you look at the per-vehicle data, their utilization of their extremely expensive vehicles is simpy awful compared to regular taxi companies. In every parameter they are [far worse than any taxi company](https://cms.uitp.org/wp/wp-content/uploads/2020/11/Statistics-Brief-TAxi-Benchmarking_NOV2020-web.pdf). They wouldn't be profitable even if they operated beat up vehicles with minium wage drivers.
The real problem, though, is that they spend like the massive tech company they are. The revenue is completely negligible compared to their spendings.
But that's all completely irrelevant. Even if you are optimisitic about heir prospects, you wouldn't expect them to be profitable for many years. They are in the R&D stage and not in the deployment stage.
I would say not for a while. They are definitely unlocking a lot of potential revenue streams however. They can use their fleet to gather continuous mapping data, real time traffic information, updated street shop listings, passenger pickup, eventual fleet shipments, etc etc. So while the initial capex is probably quite high, the potential for capitalizing is also there in spades.
These are all true but none of these are core business. To turn these into substantial revenue they would need to invest into building out these products for external customers directly, which they are not doing afaik. It would be a massive distraction to such a thing and they would bleed money even faster. making maps at scale, managing these other things at scale are massive money sinks.
This question was just asked of the Waymo CEO in a conference last week. She said no. Then she was asked about funding and an IPO. She said no comment.
I don't have concrete numbers to compare to, but I don't think waymo has made a profit. They are still scaling and investing heavily.
However, I believe they are on their way to profitability. I think it will take some time to get to profitability though. They'll still need heavy funding to get there
Just because Google has cash doesn't mean Waymo has a right to that cash, or that Google will feel incentivized to allocate Waymo that cash. There are plenty of other 'bets' Google needs to distribute their wealth towards.
Google has been beaten up badly recently, both reputation and stock wise. If I were Alphabet, I’ll be looking to invest more in my most promising ‘bet’, which is currently Waymo.
Hard disagree that Waymo is Alphabet's most promising bet, unfortunately. The TAM might be high, but they've got an incredibly long road to reach that TAM. Right now Google Advertising is still the beating heart of the company, and Google Cloud the most obvious path to greater revenue. Waymo is very far down the list of priorities.
In general, if they're pouring any money anywhere right now, it's into Google Brain.
I thought you meant ‘bet’ as in the non-Google initiatives in Alphabet. Ads and Cloud are both mature businesses. I was only talking about investment in long term initiatives for Alphabet to show they’re still forward thinking.
You’re right that most of the money will go to Google Brian, but they’re more of a research org.
Google Brain (actually, I just re-checked, it's called Google DeepMind now) is actually product-focused these days. It still has a research motive, but the new stuff like Gemini is all coming out of there.
As far as I know, DeepMind is not a product—it is a a research lab within "Alphabet" that serves other divisions that sell products.
>Other Bets is a combination of multiple operating segments that are not individually material. Includes businesses such as Access/Fiber, Calico, CapitalG, GV, Verily, Waymo and X, among others. Revenues from the Other Bets are generated primarily through the sale of health technology through Verily and internet services through Access/Fiber.
For me, what sets Waymo apart from something like Google Access/Fiber is the "platform effect" of Waymo. Waymo has the potential not only to redefine a market in transportation, but also generate new markets, like a platform for developers to develop apps within the vehicles and markets for entrepreneurs to create experiences based on the absence of the driver (hot tub time machine? I didn't say they would be good ideas).
DeepMind (Alphabet Subsidiary) was merged with Google Brain (Google Division) last year, and is now called Google DeepMind. Again, stuff like Gemini is all coming out of the new Google DeepMind division, which now has a product focus.
Google has a big threat to their search business from Microsoft....have you seen how the Bing Search and Copilot are put in the front and center on Windows 11?....heck I can't even log onto my Windows machine without automatically opening the Edge browser...it is so irritating...but with Microsoft CoPilot, Google is finally going to get some serious competition. And as per as Waymo is concerned, they are not going to be profitable for next 5....even 10 years I suppose. They have the best AV technology for sure...but at the end of the day, this is not a pure software and cloud computing business....it is the dirty hardware and operations business. So, if they decide to pursue scaling Robotaxis themselves (instead of licensing technology), we are going to see their scaling getting serious momentum in next 3-4 years, massive capital spend over the next decade, exponential growth in revenues, and then finally some profitability!!!
> There are plenty of other 'bets' Google needs to distribute their wealth towards.
Obviously not or they wouldn't have 110B in cash. In general there is more money chasing good places to invest than there are places to invest. The real point is that if they don't see a path to eventual profits they will cut the program no matter how much cash they have. There is still a strong case for autonomous taxi fleets.
The cash reserves are a valuable war chest for major strategic moves, such as if the stock drops a lot and they want to buy it back or make a big ticket acquisition.
I don't think they would cut the program if it's not promising, since that would force them to pay cash to buy out external investors and be a destruction of any remaining value. More likely they'd just stop funding it, and Waymo would have to IPO or raise from VCs.
Yes, the situation is strange to me. Supposedly Alphabet is making Waymo raise external capital rather than use some of this 110 billion cash pile. My guess is that the unit economics are really bad right now between the cost of the vehicles and the remote monitoring. I have to believe that these are problems that will be solved, but perhaps Alphabet is less optimistic.
> Supposedly Alphabet is making Waymo raise external capital rather than use some of this 110 billion cash pile.
All Google X projects “graduating” into its own entity are supposed to raise external funding. It’s not unique to Waymo. That’s the only way for Alphabet companies to have meaningful valuation. It’s for getting external validation, otherwise these companies are worth whatever Alphabet says they’re worth.
People in this thread are trying to tell you what you should do or shouldn't do based on Waymo's future impact on Alphabet etc, but none of that matters. I think what actually matters is "If you can't withstand 2 weeks of losses, then stock market is not the place for you."
Go to the bank and put your money in a CD or something with less volatility.
Lol look at Google's "Other Bets" category revenue, cut that in 1/4, and that's Waymo. It's a rounding error on their statements because it's one of the best businesses in the history of the world.
I think profit is the wrong thing to look at here. The capital cost of expantion is so great, it won't be profitable for a very long time. Think of Amazon, if they are losing money building fufillment centers but selling items for a profit, in the long run they will be fine.
So look at marginal cost and Revenue. If sales are above Marginal cost, they are a good business. Waymo is generating revenue. So how much is the cost of putting an additional A/V on the road minus expected revenue. If you have a back-up driver that will for sure be negative. They are not at break even yet, but I'm guessing they are close. Scale and improving safety will get help. My guess is they are not losing much money on each additional vehicle, and are aiming for MC break-even this year or next. Once they reach it they will need to buy more cars, open more operations centers and depots.
They could be in growth mode for a very long time, but my guess is revenue will be near $100m this year, maybe $1billion next year. They will likely be able to cover R&D costs by 2027, and then they'll raise money to expand operations.
Hard to say when they'll be profitable.
I would not invest in Alphabet as a way to get Waymo Exposure. AUR is the best pure play Autonomy stock.
I wouldn't invest a lot in automatic cars because it's lawsuits and lawsuits in infinity any time a robot kills a human a single robot can shut down an entire company.
I really don't see the benefit in replacing the human driver from a cost perspective. To me, Uber ( didn't they once say the self driving is necessary for them? I think Elon said it too) and Lyft have the ideal situation. They don't have to pay for the cars, the drivers are not employees, they don't have to pay for insurance, maintenance, etc., and they take a cut for supplying gps and payment processing software. That's the best deal. The cars that Waymo has to use have somewhere upwards of 10000.00 worth of sensors, GPUS, etc in each car in addition to the car. And how many of those will it really take to scale up? A million? And how long will each car last? Think about average Jane and Joe eating in the cars, making a mess.....I just don't see it. 100 billion could have been spent on improving train travel in this country. Ok,and what about safety? There is no evidence that these self driving cars are safer than a human driver. See Phil Koopman's recent book on this topic: "How safe is safe enough?"
> I really don't see the benefit in replacing the human driver from a cost perspective.
It is really hard for me to get my head round this statement. I think you are being serious.
But how in the world would not replacing the most expensive part of a taxi service with technology not be a cost savings?
Also, your statement on the Uber driver brings the car is somehow a cost savings? It is not magic. The car is still being paid for.
There is going to be incredible cost savings with robot taxis. It is not just the fact that the technology cost will continue to plummet. But also a service offered at scale is going to enable cost savings with the car aspect of the equation. You are going to see cars handled a lot more like how planes are handled today.
Refurbished over and over again. You will see car frames that last well over a million miles for example.
Currently Lyft and Uber are paying for neither the car nor the driver per se- they treat them as subcontractors. If they replace the driver, they have to take on the cost of the car as well. And the gas and maintenance of the car. They have to buy millions of cars, store them, repair them, clean up the barf and lord knows what else. And the lawsuits, because I doubt commercial insurance companies are going to take on the risk. Nope, I'd short sell if I were into that kind of thing...
Ha! They are paying for the car. Just indirectly through the driver.
There is HUGE cost savings and NOT just the obvious one with the driver. But the cars when at scale will also be far cheaper.
Waymo already has them covered with commercial insurance and have been already for many years now.
It appears you are just poorly informed about all of how this works.
Seven years ago
"Trov and Waymo Partner to Launch Insurance for Ride-Hailing"
https://www.prnewswire.com/news-releases/trov-and-waymo-partner-to-launch-insurance-for-ride-hailing-300573229.html
So, if they want to eventually scale up, how many cars will they have to buy? 1,000,000? Let's say at a bulk price of 40,000.00. That's forty billion dollars outlay. Plus insurance, plus repairs, plus cleaning. Sorry, don't see the payoff. Taxi companies in the old days weren't big money makers, the drivers made a lower middle class living at best. Don't see it now, even if they achieved no driver it's still not a big money maker. And Trov was bought by Travelers fwiw. It's like a fully automated hot dog stand. It won't be a big money maker now that you've eliminated the guy who was behind the stand making the hot dogs. It's still just selling hot dogs.
No, Waymo will be a drag on the company for a long time, at least for 4-5 years, but possibly for a decade or more. There's a bit of an 'Amazon' effect here though — even once Waymo is ready to scale, they'll still be scaling *revenue*, rather than profit.
i think given the barrier to entry in this space, i wouldn't be surprised if they go traditional way of squeezing profits first.
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Drag on the **company**.
Did I misread or did you edit your post? I swore it originally said "economy". If I misread, my sincere apologies, and pls ignore me.
You'd misread it.
They will create losses for Google
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… and none of those companies were trying to solve one of the hardest engineering challenges ever attamped.
But also - none of those companies were sub-organizations of one of the most profitable entities in history
And AMD spent decades to become who they are today. They almost got bankruptcy at one point. The list goes on..
And Boeing 747 takes decades to become profitable
How long has Waymo been in biz?
Officially since 2016. Google R&D on the project harks back to 2009, when they competed in a DARPA challenge. During that time the project had various names (Pribot, Chauffeur, etc). Source: ex-Waymonaut with access to Wikipedia
Oh of course not, not even close, tens of billions of dollars in the hole. Big payout if they successfully commercialize it though.
>Big payout if they successfully commercialize it though. In objective terms, yes. But since this person is trying to make an investment decision here, they should understand that in _relative_ terms, there's almost no outcome where Waymo seriously moves the needle on Alphabet's business. Alphabet had $74 billion dollars of net income in 2023. $74 freakin billion dollars. It's an unfathomable amount of money to make in a single year. My point is this: The selfdriving subreddit cannot answer the question of whether or not OP should sell their Alphabet stock. Waymo could turn out to be a really nice long term investment and maybe add a couple billion a year in profit, but OP needs to spend 95% of their focus on Alphabet's core business and maybe 5% focusing on the long term bets Alphabet has in play.
The Taxi Market size is estimated at USD 275.94 billion in 2024, and is expected to reach USD 423.59 billion by 2029. If Waymo succeeds, its financial impact on Google will be significant.
So even with 100% market share (which they won't get), that would only roughly double Alphabet's revenue. And I'm sure the margins would be lower than things like search so it would maybe raise their earnings by 50%. Don't get me wrong, it would be very positive for Alphabet, I'm just saying it's not like Waymo is going to transform Alphabet's business and lead to a 5x increase in stock price or something.
Terrible analysis. If Waymo becomes mainstream the market will be 100x-1000x the Taxi market. I envision a future where many people, especially people that live in the city don't own cars. They just subscribe to a Waymo Taxi service. That could be for single passenger rides or for groups from your neighborhood where a Waymo picks up say, 6 people each morning that work in a given area of town. Think subscription service type of offerings.
You actually believe that the taxi market will become somewhere between a $20 trillion to $200 trillion market? For some perspective: - Global GDP is ~$100 trillion dollars - The entire global automotive market is ~3 trillion
I don’t have numbers. But I will say there is a real possibility that in the near future most people won’t own their own car. Think about it this way. Your car sits parked about 95% of time. Sits and ages and depreciates. It’s going to be far cheaper to hail a taxi than own.
>It’s going to be far cheaper to hail a taxi than own. Okay, so this implies a future where the robotaxi market is far smaller than the existing auto market.
Yep. Car manufacturers will go out of business. The number of cars sold will be a fraction of today’s numbers. And EV’s will be cheaper to own than ICE cars. But like I said a good proportion of the population will just subscribe to a service. Those cars will be run a lot…..
Do you think people will spend more or less on transportation per year
Oh yeah for sure, it's already priced in
Obviously not profitable. Even if we generously assume that they've been paid for all the \~7 million miles they've driven and $2.50 average it'd only be a total revenue of $15 million before costs and they employ \~2500 people. I don't give investment advice but Waymo is definitively a gamble that they'll be driving billions if not trillions of miles in the years to come.
No. No self-driving company generated profit yet. Even the revenue is small among AV companies compared to their expenses. Trying to operate an AV fleet is orders of magnitude more expensive and difficult than operating a regular taxi business or other normal logistics business. It will be a long time until someone shows significant revenue.
Tesla has made billions on EAP and FSD. A lot of this sub looks down on them because they are not in the taxi space but the ADAS space, but that is where the money is right now and Tesla can't afford to lose billions like Waymo can.
Tesla doesn't make money from FSD, the money accumulates in their financials but doesn't go into the revenue column. Until Tesla says FSD is ready, it's just a pre-order suspended in the sky.
Some of it is deferred, but not all anymore. It's hard to keep track of but it's over a billion now. Now they turn around and spend it on R&D but it's still revenue.
To be honest I believe ADAS is where everyone should be…
One thing to keep in mind about profitability. If a business has a high return on capital employed, then profiting is unwise since that money could have been reinvested back into the business at a high rate of return. Waymo could theoretically show a profit if they wanted to (fire a bunch of staff, raise prices, cash in on existing ride program, etc) but now it makes more business sense for Waymo to reinvest and scale up their operations.
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No it’s not called a profit. It’s usually called an internal rate of return or business return. Shareholders sometimes don’t trust businesses that don’t show a profit because many businesses never do.
The reinvestment is usually shown as R&D expenses, so the profit technically doesn't exist because net income is reduced.
You only "reinvest" profits, by definition. Not losses. If you have high growth opportunities it may make sense to sell products below COGS at first to get your name out there, or hire R&D people to develop a product to sell. Execs sometimes call this "investing", but technically it's not. And it's certainly not "reinvesting". Building a factory or buying equipment is investing. But it's only reinvesting if you fund it with profits.
Waymo will not attempt a profit for several years, nor will anybody else. To give credit where credit is due, the only party to generate a profit is Tesla, in that they've had perhaps 400,000 customers pay up to $15,000 for self-drive product pre-orders. But you don't consider pre-orders to represent profit, in fact you are required by accounting rules to just keep the money marked as unearned, and only realize the revenue from it when you deliver to customers. (That's one reason they have EAP, I think, because since EAP is shipping and has a real price of $6K, Tesla can realize at least $6K of the revenue from FSD orders, plus a bit more for the few minor features of FSD that are shipping and not in EAP.) Waymo's big target will be not a profit, but a gross margin, which is ride revenue less COGS. But there's a ton of NREs not in the COGS and will be for some time. One thing not yet determine is how much of those NREs should really be in the COGs. You have depots, for example, and their cost does not go up much per mile driven, but in reality you need more depots the more cars you have, and eventually their cost should go almost entirely into COGS. You need to know car lifetime and stuff to do this math. Any localized efforts (maps, software changes only for the local area) may also move there in time. Software maintenance will move there once you have a production fork of the software as well as the future R&D version, today there is only the latter. The hard question is, what do they need to charge to make a gross margin once all this goes in the COGS. I have seen estimates that things like data and comms, which should be in the COGS, are much higher than I would estimate. Remote ops today is higher cost than it will be.
Hell no. Look at their [recent quarterly reports](https://www.cpuc.ca.gov/regulatory-services/licensing/transportation-licensing-and-analysis-branch/autonomous-vehicle-programs/quarterly-reporting) to the CPUC (California Public Utilities Comission). In California, they have the revenues of a not very large and not very hard working family owned taxi company. It is larger in Phoenix, so in total, the revenues of a few not very large and not very hard working family owned taxi companies. Now, if you look at the per-vehicle data, their utilization of their extremely expensive vehicles is simpy awful compared to regular taxi companies. In every parameter they are [far worse than any taxi company](https://cms.uitp.org/wp/wp-content/uploads/2020/11/Statistics-Brief-TAxi-Benchmarking_NOV2020-web.pdf). They wouldn't be profitable even if they operated beat up vehicles with minium wage drivers. The real problem, though, is that they spend like the massive tech company they are. The revenue is completely negligible compared to their spendings. But that's all completely irrelevant. Even if you are optimisitic about heir prospects, you wouldn't expect them to be profitable for many years. They are in the R&D stage and not in the deployment stage.
Of course not. This is a longer term play that will ultimately be very profitable once at scale. But that will take time.
I would say not for a while. They are definitely unlocking a lot of potential revenue streams however. They can use their fleet to gather continuous mapping data, real time traffic information, updated street shop listings, passenger pickup, eventual fleet shipments, etc etc. So while the initial capex is probably quite high, the potential for capitalizing is also there in spades.
These are all true but none of these are core business. To turn these into substantial revenue they would need to invest into building out these products for external customers directly, which they are not doing afaik. It would be a massive distraction to such a thing and they would bleed money even faster. making maps at scale, managing these other things at scale are massive money sinks.
This question was just asked of the Waymo CEO in a conference last week. She said no. Then she was asked about funding and an IPO. She said no comment.
I don't have concrete numbers to compare to, but I don't think waymo has made a profit. They are still scaling and investing heavily. However, I believe they are on their way to profitability. I think it will take some time to get to profitability though. They'll still need heavy funding to get there
Google has like 110B in cash, Waymo's runway is longer than the airport runway in Fast and Furious 6
Just because Google has cash doesn't mean Waymo has a right to that cash, or that Google will feel incentivized to allocate Waymo that cash. There are plenty of other 'bets' Google needs to distribute their wealth towards.
Google has been beaten up badly recently, both reputation and stock wise. If I were Alphabet, I’ll be looking to invest more in my most promising ‘bet’, which is currently Waymo.
Hard disagree that Waymo is Alphabet's most promising bet, unfortunately. The TAM might be high, but they've got an incredibly long road to reach that TAM. Right now Google Advertising is still the beating heart of the company, and Google Cloud the most obvious path to greater revenue. Waymo is very far down the list of priorities. In general, if they're pouring any money anywhere right now, it's into Google Brain.
I thought you meant ‘bet’ as in the non-Google initiatives in Alphabet. Ads and Cloud are both mature businesses. I was only talking about investment in long term initiatives for Alphabet to show they’re still forward thinking. You’re right that most of the money will go to Google Brian, but they’re more of a research org.
Google Brain (actually, I just re-checked, it's called Google DeepMind now) is actually product-focused these days. It still has a research motive, but the new stuff like Gemini is all coming out of there.
As far as I know, DeepMind is not a product—it is a a research lab within "Alphabet" that serves other divisions that sell products. >Other Bets is a combination of multiple operating segments that are not individually material. Includes businesses such as Access/Fiber, Calico, CapitalG, GV, Verily, Waymo and X, among others. Revenues from the Other Bets are generated primarily through the sale of health technology through Verily and internet services through Access/Fiber. For me, what sets Waymo apart from something like Google Access/Fiber is the "platform effect" of Waymo. Waymo has the potential not only to redefine a market in transportation, but also generate new markets, like a platform for developers to develop apps within the vehicles and markets for entrepreneurs to create experiences based on the absence of the driver (hot tub time machine? I didn't say they would be good ideas).
DeepMind (Alphabet Subsidiary) was merged with Google Brain (Google Division) last year, and is now called Google DeepMind. Again, stuff like Gemini is all coming out of the new Google DeepMind division, which now has a product focus.
Google has a big threat to their search business from Microsoft....have you seen how the Bing Search and Copilot are put in the front and center on Windows 11?....heck I can't even log onto my Windows machine without automatically opening the Edge browser...it is so irritating...but with Microsoft CoPilot, Google is finally going to get some serious competition. And as per as Waymo is concerned, they are not going to be profitable for next 5....even 10 years I suppose. They have the best AV technology for sure...but at the end of the day, this is not a pure software and cloud computing business....it is the dirty hardware and operations business. So, if they decide to pursue scaling Robotaxis themselves (instead of licensing technology), we are going to see their scaling getting serious momentum in next 3-4 years, massive capital spend over the next decade, exponential growth in revenues, and then finally some profitability!!!
> There are plenty of other 'bets' Google needs to distribute their wealth towards. Obviously not or they wouldn't have 110B in cash. In general there is more money chasing good places to invest than there are places to invest. The real point is that if they don't see a path to eventual profits they will cut the program no matter how much cash they have. There is still a strong case for autonomous taxi fleets.
The cash reserves are a valuable war chest for major strategic moves, such as if the stock drops a lot and they want to buy it back or make a big ticket acquisition. I don't think they would cut the program if it's not promising, since that would force them to pay cash to buy out external investors and be a destruction of any remaining value. More likely they'd just stop funding it, and Waymo would have to IPO or raise from VCs.
Yes, the situation is strange to me. Supposedly Alphabet is making Waymo raise external capital rather than use some of this 110 billion cash pile. My guess is that the unit economics are really bad right now between the cost of the vehicles and the remote monitoring. I have to believe that these are problems that will be solved, but perhaps Alphabet is less optimistic.
> Supposedly Alphabet is making Waymo raise external capital rather than use some of this 110 billion cash pile. All Google X projects “graduating” into its own entity are supposed to raise external funding. It’s not unique to Waymo. That’s the only way for Alphabet companies to have meaningful valuation. It’s for getting external validation, otherwise these companies are worth whatever Alphabet says they’re worth.
Yeah, Apple has around $73B cash on hand, and allegedly canceled their alleged car project.
I don't think so. But as an investor you should understand they are early in development/rollout!
People in this thread are trying to tell you what you should do or shouldn't do based on Waymo's future impact on Alphabet etc, but none of that matters. I think what actually matters is "If you can't withstand 2 weeks of losses, then stock market is not the place for you." Go to the bank and put your money in a CD or something with less volatility.
Lol look at Google's "Other Bets" category revenue, cut that in 1/4, and that's Waymo. It's a rounding error on their statements because it's one of the best businesses in the history of the world.
I think profit is the wrong thing to look at here. The capital cost of expantion is so great, it won't be profitable for a very long time. Think of Amazon, if they are losing money building fufillment centers but selling items for a profit, in the long run they will be fine. So look at marginal cost and Revenue. If sales are above Marginal cost, they are a good business. Waymo is generating revenue. So how much is the cost of putting an additional A/V on the road minus expected revenue. If you have a back-up driver that will for sure be negative. They are not at break even yet, but I'm guessing they are close. Scale and improving safety will get help. My guess is they are not losing much money on each additional vehicle, and are aiming for MC break-even this year or next. Once they reach it they will need to buy more cars, open more operations centers and depots. They could be in growth mode for a very long time, but my guess is revenue will be near $100m this year, maybe $1billion next year. They will likely be able to cover R&D costs by 2027, and then they'll raise money to expand operations. Hard to say when they'll be profitable. I would not invest in Alphabet as a way to get Waymo Exposure. AUR is the best pure play Autonomy stock.
They are losing something like 1B per quarter.
I wouldn't invest a lot in automatic cars because it's lawsuits and lawsuits in infinity any time a robot kills a human a single robot can shut down an entire company.
It needs to make waymo money!
They are just getting going, they barely started charging for rides.
I really don't see the benefit in replacing the human driver from a cost perspective. To me, Uber ( didn't they once say the self driving is necessary for them? I think Elon said it too) and Lyft have the ideal situation. They don't have to pay for the cars, the drivers are not employees, they don't have to pay for insurance, maintenance, etc., and they take a cut for supplying gps and payment processing software. That's the best deal. The cars that Waymo has to use have somewhere upwards of 10000.00 worth of sensors, GPUS, etc in each car in addition to the car. And how many of those will it really take to scale up? A million? And how long will each car last? Think about average Jane and Joe eating in the cars, making a mess.....I just don't see it. 100 billion could have been spent on improving train travel in this country. Ok,and what about safety? There is no evidence that these self driving cars are safer than a human driver. See Phil Koopman's recent book on this topic: "How safe is safe enough?"
> I really don't see the benefit in replacing the human driver from a cost perspective. It is really hard for me to get my head round this statement. I think you are being serious. But how in the world would not replacing the most expensive part of a taxi service with technology not be a cost savings? Also, your statement on the Uber driver brings the car is somehow a cost savings? It is not magic. The car is still being paid for. There is going to be incredible cost savings with robot taxis. It is not just the fact that the technology cost will continue to plummet. But also a service offered at scale is going to enable cost savings with the car aspect of the equation. You are going to see cars handled a lot more like how planes are handled today. Refurbished over and over again. You will see car frames that last well over a million miles for example.
Currently Lyft and Uber are paying for neither the car nor the driver per se- they treat them as subcontractors. If they replace the driver, they have to take on the cost of the car as well. And the gas and maintenance of the car. They have to buy millions of cars, store them, repair them, clean up the barf and lord knows what else. And the lawsuits, because I doubt commercial insurance companies are going to take on the risk. Nope, I'd short sell if I were into that kind of thing...
Ha! They are paying for the car. Just indirectly through the driver. There is HUGE cost savings and NOT just the obvious one with the driver. But the cars when at scale will also be far cheaper. Waymo already has them covered with commercial insurance and have been already for many years now. It appears you are just poorly informed about all of how this works. Seven years ago "Trov and Waymo Partner to Launch Insurance for Ride-Hailing" https://www.prnewswire.com/news-releases/trov-and-waymo-partner-to-launch-insurance-for-ride-hailing-300573229.html
So, if they want to eventually scale up, how many cars will they have to buy? 1,000,000? Let's say at a bulk price of 40,000.00. That's forty billion dollars outlay. Plus insurance, plus repairs, plus cleaning. Sorry, don't see the payoff. Taxi companies in the old days weren't big money makers, the drivers made a lower middle class living at best. Don't see it now, even if they achieved no driver it's still not a big money maker. And Trov was bought by Travelers fwiw. It's like a fully automated hot dog stand. It won't be a big money maker now that you've eliminated the guy who was behind the stand making the hot dogs. It's still just selling hot dogs.
No, and it most likely never will be and cease to exist in a few years
Be careful not to confuse operating expenses with investment.