How Robotaxis, AI, and 170Mn Users Can Reinvent UBER Technologies Stock

Business Insider

14-06-2025

The ride-hailing game used to revolve around one key factor: who could recruit enough human drivers to move passengers safely and efficiently at the right price. But in 2025, that narrative has shifted dramatically. In Austin, driverless white Jaguar I-PACEs now ferry Uber (UBER) riders without anyone behind the wheel. Just outside the city, Tesla is preparing to launch a fleet of camera-only robotaxis. Meanwhile, in London, start-up Wayve has gained regulatory approval to navigate the city's complex roads using 'embodied' AI. The race has moved from driver recruitment to deploying and managing autonomous fleets.
Confident Investing Starts Here:
Amid all this disruption, Uber has taken a surprisingly strategic—and perhaps underappreciated—approach. Rather than building its own sensors and hardware, it's leveraging its strengths: a massive user base, rich data, demand density, optimized routing, and a payments platform trusted by over 170 million users. That focus on core assets, while letting partners handle the hardware, is precisely why I still rate the stock a Buy.
Uber Earns the Right to Experiment
For years, Uber's financials felt like a rollercoaster—propped up by subsidies and weighed down by stock-based compensation. But Q1 2025 told a different story. Revenue rose 14% year-over-year to $11.5 billion, while adjusted EBITDA surged 35% to $1.9 billion. Even more impressive, both operating and free cash flow hit $2.3 billion, confirming that margin improvements are translating into real cash, not just accounting gains.
Just as important, Uber is no longer relying solely on ride-hailing. While Mobility still accounts for just over half of gross bookings, the other half now comes from Delivery, Freight, and a fast-growing advertising unit. That ad segment alone is running at a $1.5 billion annual pace after growing about 60% year-over-year, requiring virtually no additional capital. This diversification matters: it buffers Uber against economic swings in travel and commuting, while also funding autonomous tech partnerships without shareholder dilution.
Autonomous Excitement for UBER Shareholders
Waymo now operates around 100 fully electric Jaguars on the Uber platform in Austin—and according to both companies, those vehicles already complete more trips per day than 99% of the city's human drivers. Autonomy isn't just about cutting labor costs—it's about maximizing utilization beyond human limits. Drivers need breaks; robots don't. The math adds up fast, especially since Uber doesn't own or depreciate those sleek Jaguars—it simply collects a booking fee, while Alphabet picks up the hardware tab.
Competition, however, is heating up. Tesla is set to begin a limited rollout of driverless Model Ys on June 22, capitalizing on Texas's flexible regulatory stance.
Elon Musk has promised 'thousands' of robotaxis within a year, though federal regulators have already requested safety disclosures. Interestingly, this could actually benefit Uber. If Tesla underprices rides to stimulate adoption, overall trip demand increases, and Uber's algorithm is designed to route users to the vehicle that is cheaper or closer, regardless of who owns it. In that way, the platform profits from competitors' capital investments without having to match them.
Developers Need Uber
Uber's partner-first strategy is looking smarter with each passing quarter. Running a driverless fleet is massively capital-intensive—lidar systems alone can cost tens of thousands per vehicle, battery supplies are still tight, and companies need an entire depot network for charging and upkeep. Yet all that infrastructure is worthless if the cars are roaming without riders. In autonomous transport, the real bottleneck isn't hardware—it's passengers.
Uber already owns the most valuable asset in autonomous mobility: the passengers. Around 28 million trips happen on its platform every day. For any autonomy start-up, partnering with Uber instantly solves the 'cold start' problem—vehicles don't need to roam empty looking for riders. Instead, the app routes them directly to waiting customers. In return, Uber takes its cut, typically a high-teens to mid-twenties percentage of the fare, with zero added capital investment.
Layer on advertising, and the upside grows even more compelling. A captive rider staring at a screen in the back of a sleek, electric Jaguar is prime real estate for marketers. Equip those robotaxis with rear-seat displays, and the monetization potential accelerates. Even one ad per 10-minute ride could translate into billions in high-margin revenue by the end of the decade.
Plentiful Risks and Real-World Friction
As optimistic as the outlook may seem, none of this is a sure thing. A serious robotaxi accident could halt regulatory momentum, just as GM's Cruise experienced when one of its vehicles struck a pedestrian and lost its permits in California. Insurance costs in the U.S. remain steep compared to Uber's international markets, and litigation risk from aggressive plaintiffs' lawyers is always looming. Plus, if Tesla floods city centers with underpriced rides, Uber's take rate could shrink faster than trip volumes grow.
Still, Uber's diversified business model offers a buffer. Even if autonomous rollouts stall, the core business is now profitable on its own. And if pricing pressure intensifies, Uber can rely on its growing ad revenue, delivery upsells, and loyalty programs, such as Uber One, to help protect margins and maintain resilience.
Uber's Valuation
To put these possibilities into a valuation framework, I built a ten-year discounted cash flow model. I project that gross bookings will grow at an average annual rate of 15% through 2028, gradually slowing to 8% as urban markets mature. Adjusted EBITDA margins are expected to expand from the current ~11% to 18% by 2030, driven by a growing contribution from high-margin advertising and fee-based robotaxi services. Applying an 8% weighted average cost of capital and a 3% terminal growth rate, the model yields an estimated equity value of approximately $108 per share.
A couple of reality checks reinforce that result. At about 15x forward earnings, the stock trades at a discount to the S&P 500's 28x, despite better cash conversion. UBER's performance against its peers is also impressive, ranking highest on TipRanks' indicators and Smart Score.
What is the Prediction for UBER Stock?
On Wall Street, UBER stock carries a Strong Buy consensus rating based on 30 Buy, three Hold, and zero Sell ratings over the past three months. UBER's average stock price target of $99 implies approximately 15.5% upside potential over the next twelve months.
Uber's Autonomous Advantage and Robotaxi Economics
A few years ago, Uber's story hinged on whether part-time drivers could make city life more manageable without wiping out the company's margins. Today, the question has evolved: can removing drivers entirely push profitability to levels few envisioned back in 2017? Uber's decision to rent out its massive rider base to whichever autonomous platform proves safest and most cost-effective looks, for now, like the smartest, most capital-efficient move on the board. The company is generating sustainable profits, funding innovation through operating cash flow, and preserving the flexibility to pivot between partners or renegotiate terms as technology advances.
Autonomous taxis won't take over every city street overnight—but the real contest over who profits from them is already underway. And because Uber controls the demand side, it's positioned to earn economic rent, regardless of which lidar, camera, or neural net ultimately powers the vehicle. With shares still trading at traditional software multiples—ignoring the platform's optionality—I'm happy to stay in the back seat with my Buy rating, and let the algorithms do the driving.