It’s very rare that I immediately make a share a large holding in my ISA. In my experience, it’s better for a stock to earn that position over time through outperformance and increasing levels of trust.
However, I recently made an exception with Uber Technologies (NYSE: UBER). And I did so in large part because of its massive opportunity in a brand new market potentially worth $1trn+ in future.
Robotaxis are here
The market is autonomous vehicles (AVs). While we’ve long heard about driverless cars, they’ve always seemed a decade away (at least). But Waymo’s robotaxis are mushrooming across San Francisco and Los Angeles and are also on the roads in Phoenix.
Indeed, Waymo (owned by Google parent Alphabet) says it now provides more than 100,000 paid robotaxi rides per week across the three cities.
Next year, it will expand to Atlanta and Austin. And it’s already doing 24/7 curbside pickups and drop-offs at Phoenix Sky Harbor International Airport in Arizona.
AVs by Cruise (owned by General Motors) are also back on the road after one seriously injured a pedestrian last year.
In the UK, self-driving AI startup Wayve (backed by Microsoft, Nvidia, and Uber) is leading the charge. The last transport secretary said that AVs could be on UK roads by 2026.
How does this benefit Uber?
At first glance, this might not seem great for Uber. It sold its self-driving division to Aurora Innovation in 2020 and still has human drivers delivering passengers and food through its platform.
However, Uber is moving quickly to open up its network to all the big AV players mentioned here. When Waymo expands to Austin and Atlanta, trips will be available only be through the Uber app.
So the ride-hailing giant is positioning itself at the heart of a potentially massive new future industry.
Uber is uniquely positioned to offer tremendous value for autonomous vehicle players looking to deploy their technology at scale.
Uber CEO Dara Khosrowshahi
The Tesla wildcard
In October, Elon Musk is set to unveil Tesla‘s long-awaited robotaxi. This fleet will likely have no steering wheels or pedals. The plan is to eventually give Tesla owners the option to send their cars out into a wider robotaxi network to earn them (and the company) money.
Of all the AV firms, I’d say Tesla is the most likely to avoid partnerships. Musk has the type of social media following to rival Uber’s massive 156m user base. He could probably get millions of downloads on a custom-built consumer app within hours.
So Tesla could be a major competitive threat one day.
Huge potential
As things stand, Uber is humming along nicely. Last year, revenue jumped 17% to $37.3bn and it’s now reporting surging profits.
Here are the earnings and valuation forecasts for 2024-2026:
Year
Revenue
Earnings per share (EPS)
Forward P/E ratio
2024
$44bn
$1.08
71
2025
$50bn
$2.28
34
2026
$58bn
$3.13
24
Data from TradingView
Looking ahead, most of Wall Street thinks the AV opportunity is in the trillions of dollars. Therefore, this could become the next AI-type investing theme over the coming decade. And Uber’s app is primed to become the place where people (including myself) book these driverless trips.
By eventually replacing many of its drivers, Uber could reduce labour costs and increase profit margins. Its staggering potential in the $1trn+ robotaxi market has earned the stock a prominent place in my ISA.
The post The $1 trillion reason I’ve been buying Uber stock for my ISA appeared first on The Motley Fool UK.
5 Shares for the Future of Energy
Investors who don’t own energy shares need to see this now.
Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.
While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.
Open this new report — 5 Shares for the Future of Energy — and discover:
Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
How to potentially get paid by the weather
Electric Vehicles’ secret backdoor opportunity
One dead simple stock for the new nuclear boom
Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!
Grab your FREE Energy recommendation now
More reading
Robotaxis are coming: here are 3 S&P 500 stocks to play the theme
8 shares that Fools have been buying!
With these 3 growth stocks, I’m hoping to build generational wealth
2 shares I’ve just bought for income and growth in my Stocks and Shares ISA
Best US stocks to consider buying in September
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Ben McPoland has positions in Uber Technologies. The Motley Fool UK has recommended Alphabet, Microsoft, Nvidia, Tesla, and Uber Technologies. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
