Can Waymo justify a $100 billion valuation? This is the question investors are poised to answer. As the autonomous ride-hailing company under Google's parent, Alphabet, Waymo is negotiating a new round of funding, targeting a valuation that equates to 280 times its annualized revenue—a multiple that far exceeds those of other ride-hailing firms.

Despite recent minor setbacks, such as service suspensions during a San Francisco power outage, Waymo's rapid expansion in recent months suggests it has the potential to grow into a company worthy of its valuation. As it adds users in more cities and launches new services—whether by taking market share from Uber and Lyft or by tapping into entirely new demand—its revenue is expected to continue growing.

To date this year, the Google-controlled company has completed over 14 million paid autonomous rides without safety drivers, triple the number from 2024. It currently offers paid travel services in five cities, with annualized revenue surpassing $350 million. The company plans to open its robotaxi service to the public in at least five additional cities by 2026. The most recent forecast from Morgan Stanley analysts, issued in January, suggests Waymo's annualized revenue could reach at least $2.5 billion by 2030.

Evan Schlossman, an investor at venture capital firm SuRo Capital who has been following Waymo, stated, "Waymo is a unique company with integrated hardware and software capabilities, enabling us to see rapid growth from a large revenue base without relying on extreme assumptions." He believes it is not unreasonable to expect Waymo's future operational areas to expand to roughly five times their current size.

If annualized sales reach $2.5 billion, Waymo's projected valuation multiple would drop to 40 times revenue. Even so, this compares to Uber and Lyft, which both trade at revenue multiples of less than 3 times. Although these two companies are likely growing much slower than Waymo, they are expected to achieve revenue growth in the mid-teens (around 15%) for 2025 and are already profitable.

The extent to which the adoption of autonomous taxis will erode demand for traditional ride-hailing services remains unclear. Morgan Stanley analysts predicted in a report this month that Uber's compound annual growth rate could reach 14% over the next seven years if autonomous taxi demand is entirely additive to human-driven ride demand. However, if autonomous vehicles displace some trips previously provided by human drivers, Uber's growth rate during the same period would fall to single digits.

A significant advantage for Waymo is that its revenue streams may extend beyond ride-hailing. Co-CEO Tekedra Mawakana indicated that the company plans to expand from robotaxis into local delivery and long-haul trucking, and ultimately aims to license its autonomous driving technology to automakers.

In October, Waymo announced a partnership with delivery platform DoorDash to launch autonomous food delivery in Phoenix, which may preview its expansion into new business lines. In Uber's business structure, food delivery accounts for one-third of revenue and is growing faster than its ride-hailing segment; excluding stock-based compensation, depreciation, and amortization, delivery contributes approximately 40% of operating profit.

For Waymo, licensing software to automakers might still be some time away, but such licensing fees could eventually boost profit margins—because the administrative costs of maintaining and improving software are likely not as high as deploying more autonomous vehicles.

Fortunately for Waymo, if it proceeds with this funding round, there is precedent for cash-burning ride-hailing startups eventually realizing their valuations. In December 2014, Uber, then still private, raised funds at a $40 billion valuation—double its valuation from the previous round in June and the highest for a venture-backed startup at the time, drawing widespread attention from investors and analysts. Then just five years old, Uber's revenue was only a few hundred million dollars (the exact figure was not publicly disclosed at the time).

Concerns about Uber's valuation proved excessive. In 2015, Uber's net revenue was approximately $1.5 billion, roughly triple the 2014 figure, meaning investors at the time were paying about 27 times expected sales.

Tesla's Advantage

Although Waymo avoids paying human drivers to operate its service, many uncertainties remain regarding other long-term costs. Insurance costs for autonomous vehicles are a key uncertainty, and another major concern is the high cost of the detection sensors and associated hardware installed on Waymo's vehicles.

Regarding hardware costs, Waymo is at a disadvantage compared to Tesla. Tesla's autonomous vehicles use lower-cost cameras for road mapping, currently offer services to ride-hailing passengers in only a few cities, and are supervised by human drivers. Morgan Stanley analysts estimated in a report this month that Waymo's current operating cost per mile is approximately $1.43, while Tesla's is just $0.81.

Whether this gap translates into a long-term advantage for Tesla remains to be seen. Morgan Stanley analysts stated that Waymo's planned new vehicles for deployment in 2026 could see operating costs drop to between $0.99 and $1.08 per mile. This is partly because Waymo is testing lower-cost base vehicles (models without autonomous technology) from Hyundai and Ji Ke, rather than the premium Jaguar I-Pace models used for most public ride services currently. Furthermore, insurance costs could decline if the safety record of autonomous taxis continues to improve.

Beyond costs, Waymo holds a distinct advantage over other robotaxi competitors in terms of regulatory approvals. Tesla, like Amazon's autonomous taxi company Zoox, is still awaiting permits to charge passengers in the cities where it operates. Long-time Tesla bull, venture capitalist Chamath Palihapitiya, posted on X, "The onus is on Tesla to demonstrate an error tolerance that meets or exceeds Waymo's." He believes Tesla needs such performance to convince regulators to allow broader operations.

However, even if Tesla or Zoox gain the necessary permits, Waymo has already built a solid lead by being first to enter multiple major cities. If Waymo maintains an aggressive focus on expansion and market share capture, similar to Uber's early growth phase, its competitive moat could become even stronger than Uber's—Uber's current market capitalization is over 20 times that of its rival Lyft.

When Uber went public in 2019 with a market cap of $82 billion, it was not far from its peak private valuation. Today, Uber is profitable, more diversified, and has a market cap roughly double its IPO value. Waymo's investors appear ready to place a similar bet.