Editor’s note: A version of this article was previously published in Oct. 2024 with the title, “Small Caps, Big Potential in the Self-Driving Boom.” It has since been updated to include the most relevant information available.
Thanks to immense technological progress, the world is rapidly changing all around us.
Admittedly, some of these changes are intangible. Big Tech firms, for example, are spending billions of dollars to develop new AI applications. But thus far, many of those projects are still in development. Therefore, outside of bots like ChatGPT, folks like you and me have largely yet to witness the change that is AI.
But one technological transformation happening right now is very much real. And it is very “close to home.” At least, it is certainly close to my home.
About a month ago, I was flying back from a work trip into Phoenix Sky Harbor International Airport. It was late. My wife and kids were asleep. So, I fetched a ride from a ride-hailing app. The car arrived. It took me to my home in the suburbs. Dropped me off.
It was a typical ride-hailing experience.
Except for one critical detail…
There was no driver.
The car that picked me up from the airport, drove me through Phoenix, and dropped me off at my house had no driver.
It was a fully autonomous vehicle operated by Waymo.
Waymo is the self-driving unit at Alphabet Inc. (GOOG). It’s been working on developing autonomous vehicle technology for over a decade now. For the past few years, it’s been quietly testing its technology through autonomous ride-hailing in Phoenix and a few other American cities. Folks in those areas can hail an autonomous Waymo and have it drive them from place to place. I bet many of you live nearby one of them and can try this yourself.
That’s what I did for my trip from Phoenix Sky Harbor International to my house.
(Check out the video of my self-driving ride here.)
Here’s How It Works
After downloading the Waymo One app, I summoned a ride, much in the same way you call an Uber or a Lyft through their apps.
It arrived at the airport pickup location. I unlocked the car with my phone and stepped into the back of the vehicle. I put down my bags, buckled my seatbelt, and clicked “Start Ride” on an iPad-like display in the backseat.
The Waymo – which, in my case, was a Jaguar – drove itself away from the airport, navigated through Phoenix traffic, and, some 30 minutes later, dropped me off safely at my house.
It was a wonderful experience.
And not an isolated one.
Waymo is currently delivering more than 150,000 autonomous rides per week in Phoenix, San Francisco, and Los Angeles.
That’s a lot of rides!
And they’re growing quickly. Just a few months ago, Waymo was only completing about 50,000 rides per week – meaning it’s tripled its ride volume in just a few months.
I think that number will triple in the next few months, too.
Earlier this summer, Waymo announced that it is expanding its driving area in Phoenix and including highways. Less than three months ago, it announced expanded driving areas in San Francisco and Los Angeles. And in just a few months, Waymo plans to roll out autonomous rides to Austin and Atlanta.
Plus, the company has partnered with Uber Technologies Inc. (UBER) to autonomously deliver food through Uber Eats in select locations, including Phoenix.
It seems Waymo is firing on all cylinders right now.
Maybe that’s why Alphabet just invested an extra $5 billion in the company. With that much funding, we wouldn’t be surprised to see Waymo operating in every major U.S. metro by the end of 2025.
This Progress Is Widespread
Though, it isn’t just Waymo that’s swiftly making self-driving cars a reality.
Aurora Innovation (AUR), an autonomous trucking company, has partnered with several major firms like Paccar, Volvo, and Uber Freight to develop fully self-driving trucks. Another startup – Kodiak Robotics – is also focused on making autonomous big rigs.
Both are preparing to launch fully autonomous trucks on public roads in Texas later this year (without safety drivers). That means that in just a few months, Texans could see a self-driving 18-wheeler hauling goods from city to city. Aurora also plans to launch autonomous trucks in the Phoenix area soon as well.
Meanwhile, in China, Baidu (BIDU) has launched an autonomous ride-hailing service called Apollo Go. It appears to be just as big as Waymo, completing nearly 100,000 rides per week.
And very recently, Elon Musk unveiled the Cybercab and Cybervan, two fully autonomous vehicles – without steering wheels – that Musk sees as the future of Tesla (TSLA).
Folks, the writing is on the wall.
With Waymo and Apollo Go each completing about 100,000 autonomous rides per week and expanding rapidly… Aurora and Kodiak preparing to launch fully autonomous trucks on public freeways within months… and Musk unveiling autonomous cars that have no steering wheels…
The Age of Autonomous Vehicles has arrived.
The Final Word on the Robotaxi Revolution
Self-driving cars are here. They are spreading rapidly. And they’ll likely become a global ubiquity, possibly entirely replacing human-driven cars, trucks, and buses at some point.
This future may still seem many years away. But it’s already a reality in Phoenix, San Francisco, and Los Angeles. It will soon be a reality in parts of Texas and Georgia. And it may quickly become a reality all over… because in addition to all these technological developments, the regulatory backdrop of self-driving cars is changing for the better, too.
In fact, this past weekend, reports leaked that President-elect Donald Trump will work to ease the federal laws governing self-driving vehicles, making it easier for companies like Aurora, Waymo, and Tesla to massively deploy autonomous cars across America.
We earnestly believe that 2025 could very well be the year that the self-driving car went mainstream.
Of course, the arrival of the Age of Autonomous Vehicles also means the arrival of huge opportunities in AV stocks.
The global transportation services market is estimated at over $7 trillion. And autonomous vehicles will turn that entire industry on its head, meaning it could impact how more than $7 trillion flows through the global economy.
Huge investment opportunities should emerge out of all that change.
Now, the obvious picks in this space are GOOGL and TSLA. The former owns Waymo. The latter is about to roll out its robotaxi program. If both scale and take over the global ride-hailing industry – estimated to be an $11 trillion market by 2030 – GOOGL and TSLA stock will be big winners.
But, believe it or not, Tesla may not be Musk’s biggest winner in 2025.
Rather, his newest startup, xAI, could become his biggest cash cow. And we’ve found a really interesting “backdoor” way to play it.
Learn more now before those gains start rolling in.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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