Uber (UBER -0.38%) gave investors a lot to cheer about when it reported its fourth-quarter financials. Revenue increased 15% year over year to $9.9 billion, while the company generated $1.4 billion in net income during those three months. Both of these headline figures crushed Wall Street consensus analyst estimates.

In the last 12 months, shares of Uber have soared 102% (as of Feb. 12). And they recently hit a fresh all-time high.

Before you rush to buy this transportation-as-a-service stock in the hope of riding the momentum to strong returns, take the time to understand what might be Uber's biggest risk. Let's take a closer look at the ride-hailing and delivery business.

No more drivers

In 2023, Uber completed a whopping 9.4 billion trips, which was up 24%, compared to the prior year. The business had 150 million monthly active platform consumers.

Moreover, Uber handled roughly $138 billion of total gross bookings in the last 12 months. All of this not only speaks to the company's fantastic scale but also demonstrates just how successful and dominant Uber is currently.

Despite the strong fundamentals, which seem to be making investors happy, there's a huge risk facing the business: autonomous-driving (AV) technology.

It makes complete sense why AV tech could change Uber's entire business model. Drivers are the biggest cost of any ride or delivery. If there's a way to eliminate this expense, it could create a financial windfall for Uber.

On the one hand, you would think that a business that relies so heavily on moving people and goods from place to place would be directly working on this initiative. But due to ongoing losses, coupled with heightened uncertainty as to when progress would be made, Uber sold its AV research division in December 2020. In my opinion, this move turned AV technology from a potential benefit to a major risk factor.

Other companies have continued their efforts. Tesla and Alphabet's Waymo are two of the leading businesses when it comes to AV advancements. And they both have deep pockets to keep investing heavily.

If fully autonomous-driving technology becomes a reality, it could disrupt the company because the owner of that software could launch its own robotaxi service. This is exactly what Tesla is trying to do. Its advantage comes from the massive amount of data it can collect from its vehicles.

Uber has partnered with Waymo to provide driverless rides in the Phoenix area. But it's worrisome because the latter may be able to it create its own consumer-facing app in the future since it fully owns the underlying technology -- which is the most important aspect and the most difficult to develop.

In this scenario, the actual vehicles will become commodities, and the businesses that can control the user experience and the software powering the cars will win. There's a possibility that this isn't going to be Uber.

Don't ignore terminal risk

Although Uber shares have been on a tear and currently sit just 3% below their all-time high, they trade at a price-to-sales multiple of 3.9. That's cheaper than the historical average of 4.4.

Investors might view the current setup as an attractive buying opportunity. After all, Uber is the leader in its industry, it benefits from network effects, and it continues to turn a profit. It's easy to be bullish on the stock.

But if this sounds like you, it's important not to forget the terminal risk of autonomous driving one day becoming a reality. Understanding this downside factor can help you set realistic expectations about what things might look like over the long term. So consider buying a smaller initial position until you feel more comfortable.