Investors pumped the brakes on the rally for Uber Technologies on fears over new competition from robotaxis. But Uber stock is bouncing back on hopes that the ride-hailing platform can be a key player in the robotaxi trend.
Uber stock has risen roughly 30% this year, after shedding about 2% in 2024 on worries that autonomous vehicles, or AVs, from Waymo and Tesla could soon challenge Uber's ride-hail dominance. Chief Executive Dara Khosrowshahi has downplayed those fears. Robotaxis are still a ways off, he told analysts recently, and when they do arrive, Uber will prove itself an "indispensable" partner. That view has given Uber a lift, said William Blair analyst Ralph Schackart, who rates Uber as outperform.
"Investor expectations moved from dire to more reasonable," he told IBD. "On the most recent earnings call, Uber articulated its AV strategy, and put some reasonable growth estimates and market share metrics around the transition, that in our view, eased investor concerns."
Facing Off With Waymo And Tesla
Uber faces stiff potential rivals in the robotaxi arena, even as it tries to turn some competitors into allies.
Take Waymo, the Alphabet company which reached a milestone 150,000 trips per week late last year with plans for further expansion. Tesla is expected to be a major player too, with Chief Executive Elon Musk capturing investors' imaginations with his pledge to create an Airbnb-meets-Uber style robotaxi service in the near future.
With both companies offering new potential competition, Uber has spent the past 12 months playing defense and explaining its strategy toward autonomous vehicles.
Focus On Waymo Partnership
Forging alliances has emerged as a key element of the Uber game plan.
After selling off its division developing self-driving cars five years ago, the company is focused on partnering with developers of self-driving vehicles to offer their vehicles to Uber's 171 million active users.
That includes a partnership with Avride, part of Nebius Group. Uber recently launched autonomous vehicles on its app in Abu Dhabi with China-based AV developer WeRide. Uber is also collaborating with Nvidia to help develop autonomous driving technologies.
Uber's smaller rival Lyft has a similar strategy. The company recently said it will have autonomous vehicles on its app in Dallas next year through a partnership with Mobileye.
But Uber has the most prominent partnership in its deal with Waymo.
Uber recently opened up a waitlist for Austin, Texas, riders who want to take a Waymo robotaxi ride through the Uber app. The company also partnered with Waymo in Phoenix and for the Google-backed startup's upcoming expansion to Atlanta.
The relationship is a complicated one, however. Waymo is a fraction of Uber's scale but is competing against Uber directly in markets such as Los Angeles and San Francisco. Uber stock took a big hit in December when Waymo announced plans to expand to Miami without Uber.
Austin will offer a crucial test for Uber's strategy. Since Waymo also offers rides on its own app in Phoenix, Austin will be the first market where Waymo rides will be exclusively offered through Uber. Waymo's Atlanta expansion will also rely exclusively on Uber.
"I think we're going to demonstrate pretty clearly that a combination of a great AV provider like Waymo and Uber is the best combination out there," Khosrowshahi said on the company's Feb. 5 earnings call.
The Tesla Factor
Meanwhile, Tesla remains a potential concern for Uber. Musk has told investors to expect Tesla robotaxis on the road in Austin in June. He also said the company has been testing a ride-hailing app with its employees.
Rather than partner, it looks like Tesla "wants to go head-to-head with Uber and Lyft," Steve Man, global head of auto and industrial market research at Bloomberg Intelligence, told IBD.
However, Uber doesn't appear hungry for a Tesla showdown.
"No one wants to compete against Tesla or Elon, if you can help it," Khosrowshahi said in a recent interview with analyst Ben Thompson's Stratechery newsletter.
Khosrowshahi added that Tesla could come to a similar decision for its robotaxis as McDonald's once did for its burger and fries.
"McDonald's has its own app, and has an incredible brand, has a lot of capital, has terrific reach," Khosrowshahi told Thompson. "They still work with Uber Eats and DoorDash, because they want to drive utilization (of their restaurants)."
Robotaxi Timeline
Despite buzz over Waymo and Tesla, analysts expect a slow rollout for autonomous vehicles in the U.S.
Rules of the road vary state to state. Plus, autonomous vehicles will require a "superhuman" safety record, Khosrowshahi told analysts, to get regulators comfortable with the idea. Autonomous vehicles are still not cost-competitive with drivers, the Uber leader added on the Feb. 5 call.
Man, of Bloomberg Intelligence, says he expects gradual progress toward autonomous vehicles, rather than a sudden breakthrough. That will include rollout of more automated safety features similar to lane-departure warning and adaptive cruise control that will become mandated, in some cases, for new vehicles.
"The evolution to full autonomy is the regulators keep requiring these new safety features that are good for AVs down the road," Man said. "As more of these safety features get added on, the sum of these features will make it feel even more autonomous."
Is It Google Vs. Tesla?
A big question for Uber's strategy is how many partners it will ultimately have available. General Motors-backed Cruise said in December that it would wind down its autonomous taxi efforts.
Evercore ISI analyst Mark Mahaney, who is bullish on Uber, said in a recent client note that investors are debating what he called a "robotaxi roadkill bear thesis." The take on Uber stock envisions Tesla and Waymo shaking out as the only major autonomous vehicle vendors, leaving Uber with limited partner options.
But Khosrowshahi pushed against that view during the company's analyst call. He compared AVs to another trend that has dominated the technology industry.
"We think competition is great for the industry," Khosrowshahi told analysts, citing the impact of DeepSeek on the battle over AI. "And we think the same thing that's happening in generative AI is happening in AV as well. You'll see it definitely in the U.S., and you're going to see it all over the world."
Uber Stock Is On A Roll
Meanwhile, Uber stock has been on a roll.
The shares initially fell following Uber's Q4 results on Feb. 5, but its stock rebounded to close out the same week. Analysts gave broadly positive commentary on the results, overlooking bookings guidance that missed estimates and helped push shares lower.
It helped that Uber got a prominent new investor. Bill Ackman announced Feb. 7 that his Pershing Square Capital Management fund began amassing a position in Uber in January and now holds 30.3 million shares.
"We believe that Uber is one of the best managed and highest quality businesses in the world," Ackman wrote on X. "Remarkably, it can still be purchased at a massive discount to its intrinsic value."
Uber stock has formed a cup base with a buy point at 87, according to MarketSurge. A move above that level would mark a new high for the ride-hailing firm after a slump that started in October.
