Shares in Serve Robotics (SERV -1.24%) rose by 15.7% in the week through Friday morning, driven higher by the initiation of coverage by Wedbush Securities, whose analyst Dan Ives slapped a $15 price target on the stock and gave it an "outperform" rating. Given that the price target represents a 33% premium to the stock price at the time of writing, it's not too late to buy in if you have confidence in the analyst's expectations.
Serve Robotics' expansion plan
While it's never a good idea to slavishly follow Wall Street analysts, there's certainly a case for the stock based on the growth potential for its last-mile delivery of artificial intelligence (AI)-driven robots. Last-mile deliveries to residential addresses can be costly and inefficient, and it makes perfect logistical and commercial sense to have them carried out by robots; hence Serve's contract with Uber Eats.
Management has already launched the service in Los Angeles, Miami, Dallas, and Atlanta, and expects to scale these locations while launching additional ones in Chicago and ultimately reaching 2,000 robots in service by the end of the year.
Image source: Getty Images.
Where next for Serve Robotics?
The Wall Street consensus predicts sales to surge by $35 million in 2026 and then $71 million in 2027, driven by the rollout. That's fair enough, but before investing in the stock, consider that this is a competitive field. Unlike Tesla and its robotaxi rollout, Serve simply doesn't have a dominant market position in the type of vehicle/robot used in service. That might put pressure on its ability to grow margins in the future.
