Anyone patiently waiting for Google's budding robotaxi business to matter may not have to wait much longer.
That's the top takeaway from Alphabet (GOOG +1.59%) (GOOGL +1.59%) CEO Sundar Pichai's internal update on the development of Waymo delivered late last year, when he suggested the self-driving taxi brand would "meaningfully" contribute to Alphabet's results beginning sometime in 2027.
And there's no reason to suspect otherwise now. Since then, the company has launched service in Sacramento, Chicago, and Dallas, and expanded service in a slew of other cities, with more on the way before the end of 2026. As of midyear, the service was providing over 500,000 rides each week. In short, not only does the autonomous taxi's technology work, but consumers are embracing it.
The question is, does what constitutes "meaningful" to Pichai do the same for Alphabet's shareholders?
Image source: Waymo.
Where Waymo stands
Waymo's results still aren't broken out within Alphabet's quarterly reports, and likely won't be anytime soon ... if ever. For now, they're part of the company's "other bets" arm, which contributed just $382 million in revenue during the three-month stretch ending in June.
If you dig deep enough into Alphabet's investor-facing information, though, you'll find some data that paints a clearer picture of where Waymo is. Case in point: In an earlier fundraising presentation, the company indicated that Waymo is worth $126 billion. Even without knowing exactly what this means for revenue, it's clearly not an insignificant amount, even if the bulk of the valuation reflects what this business could become rather than what it is.
And there's certainly plenty of opportunity ahead, even if most of it must wait a while to be tapped. Goldman Sachs expects the U.S. robotaxi market to be worth $19 billion by 2030, en route to $48 billion by 2035, when the worldwide autonomous taxi industry could be worth more than $400 billion.
NASDAQ: GOOGL
Key Data Points
Respectable, but not under-reflected
That's impressive, to be sure, and there's no denying that Alphabet's got a chance to win at least its fair share of this growth. From this perspective, Waymo isn't unreasonably valued at $126 billion even if revenue is currently modest. That revenue is likely coming, eventually.
It might be a bit of a stretch, however, to suggest Alphabet shares are currently undervalued specifically because the market is underestimating how soon Waymo will produce meaningful revenue. Pichai's prediction that 2027 (or 2028) will mark fiscal turning points for the business might have been better described as "measurable" rather than meaningful. For perspective, Google's search business alone produced over $63 billion of revenue in the second quarter, while cloud computing -- where it reports its artificial intelligence results -- added nearly $25 billion to the top line.
Regardless, with or without Waymo's foreseeable future priced in, Alphabet's still arguably undervalued. Analysts think so, anyway. The vast majority of them currently rate GOOGL stock a strong buy, with a consensus price target of $ 426.68, which is 26% above the ticker's current price.
