Waymo's innovation-adoption curve is at an inflection point; The future points to Waymo and Tesla dominating the ride-hailing space; Uber and Lyft might be 'doomed AI victims'

1) In two recent e-mails, I highlighted Google's innovation in the areas of real-time speech translation (May 22) and AI video generation (May 30), both of which make me bullish on its parent company stock, Alphabet (GOOGL).

Here's another – and perhaps more important – example of an Alphabet subsidiary that's on the path to becoming enormously valuable, which could drive the stock upward: self-driving car company Waymo.

This recent Wall Street Journal article details the company's explosive growth in California and its plans to expand across the country: It's Waymo's World. We're All Just Riding in It. Excerpt:

Unless you live in one of the few cities where you can hail a ride from Waymo... it's almost impossible to appreciate just how quickly their streets have been invaded by autonomous vehicles.

Waymo was doing 10,000 paid rides a week in August 2023. By May 2024, that number of trips in cars without a driver was up to 50,000. In August, it hit 100,000. Now it's already more than 250,000...

This is not just because Waymo is expanding into new markets. It's because of the way existing markets have come to embrace self-driving cars.

As the article continues, Waymo is on a classic innovation-adoption curve. And it's currently at a crucial inflection point, where novel technology starts becoming normal:

From the Model T to ChatGPT, there is a long history of magical products that come along and follow a similar path to success.

At first, these innovations appeal to a niche market of tech geeks and early adopters. Only then do some of those products become part of everyday life. It tends to happen gradually, then suddenly, so it can be hard to recognize those breakthroughs in real time.

But if you study the Waymo data, you can see that curve taking shape.

It cracked a million total paid rides in late 2023. By the end of 2024, it reached five million. We're not even halfway through 2025 and it has already crossed a cumulative 10 million. At this rate, Waymo is on track to double again and blow past 20 million fully autonomous trips by the end of the year.

"This is what exponential scaling looks like," said Dmitri Dolgov, Waymo's co-chief executive, at Google's recent developer conference.

Now, Waymo is rapidly expanding its reach all over the country, and even overseas:

Waymo's autonomous taxis are only available in a few cities right now, including Phoenix, Los Angeles and San Francisco, where self-driving cars are more of a tourist attraction than cable cars.

But the trajectory suggests what's happening there might just happen everywhere – and sooner than you think...

It's becoming more popular in the places that it has already conquered even as it pushes into new cities. Earlier this year, it entered Austin, Texas, through a partnership with Uber. This summer, it's planning to launch in Atlanta. Next on the list are Miami and Washington, D.C. The cars are now mapping Boston, Nashville, New Orleans, Dallas, Las Vegas and San Diego. This past week, the company announced that it's testing Orlando, Houston and San Antonio. Waymos have even crossed the ocean to begin collecting data in Tokyo.

Like I said in my recent e-mails, I'm amazed by Alphabet's dedication to innovating new technology, and I continue to be bullish on the stock.

2) I sent the Waymo article to my tech entrepreneur friend who lives near San Francisco, and he replied:

We've ridden in them – they are awesome!

They are everywhere in San Francisco!

They will truly make the world safer – I assume that they will cut traffic accidents by 90%, just like how great engineering, year after year after year, has made commercial aviation really safe.

Waymo started almost exactly 20 years ago in the garage at Stanford University, adjacent to the garage used by the Stanford Solar Car Project. And the reason [Google co-founder] Larry Page first had the idea for Waymo was because he had worked on the solar car project at Michigan. And he hated waiting for the bus on cold Michigan days.

Solving automobile autonomy is hard – I think that they have spent roughly $30 billion to get here! Everyone else has tapped out – it's been too hard, taken too long, and cost too much money, though keep an eye on Tesla.

3) Chamath Palihapitiya, tech mogul and founder of venture-capital firm Social Capital, is also bullish on Waymo. And in a recent post on social platform X, he predicts that Waymo and Tesla (TSLA) will eventually dominate the ride-hailing space, likely at the expense of Uber Technologies (UBER) and Lyft (LYFT):

4) In my May 12 e-mail, I shared this San Francisco Standard article on how the competition is playing out among these ride-hailing companies: Why Waymo won't kill Uber – but Elon Musk might. Excerpt:

Uber is operating at a scale so large that at one point in December, there were 1 million trips happening through its platform simultaneously...

But data released in December appeared to show Waymo rapidly chipping away at the market shares of Uber and Lyft. When Waymo launched in 2023, Uber and Lyft had San Francisco market shares of 66% and 34%, respectively, according to YipitData, which uses customer receipts for its estimates. Fifteen months later, at the end of 2024, Waymo was at 22% – the same as Lyft – with Uber at 55%.

As the article continues, Elon Musk has long staked the future of Tesla on self-driving cars – a future that threatens Uber and Lyft:

At Tesla's "cybercab" launch last year, he said the steering-wheel-less vehicle will cost less than $30,000 and be available before 2027. Regardless of the ambitious timeline (Musk has repeatedly made predictions about autonomous vehicles that have not come to pass) – Tesla developing a low-cost, scalable car would be a serious game changer...

Musk has said that Tesla owners will eventually be able to rent out their self-driving vehicles and generate income as part of a Tesla robotaxi network. While questions remain about insurance and legal liability, Tesla could potentially have a huge fleet of cars able to come online when demand surges.

My team and I highlighted the threat that autonomous vehicles pose to Uber and Lyft – and listed the stocks as "doomed AI victims" – in a special report for Stansberry's Investment Advisory subscribers last August. (I cited some parts of the report in my February 11 e-mail.)

Investment Advisory subscribers can read the full report here: Dead Men Walking: Nine Doomed Companies in the Crosshairs of AI. If you aren't a subscriber, you can find out how to gain access to it – along with the full archive of other Investment Advisory special reports and the entire portfolio of official recommendations – right here.

Best regards,

Whitney

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