Al Root

Robo-taxis are arriving faster than expected, keeping Morgan Stanley bullish on Alphabet stock.

"Waymo continues to scale faster than expected...leading with safety," wrote Morgan Stanley analyst Brian Nowak in a Thursday report.

Alphabet's robo-taxi company recently released updated statistics. Through December 2025, it has driven 170.7 million rider-only miles without a human driver. Waymo reports a roughly 10-fold improvement in serious accidents and a five-times improvement in injury-causing crashes, compared with human drivers.

And the total of miles driven have exceeded Morgan Staley's estimates.

"The [growth] inflection is expected to continue, too, as Waymo launches more cities -- we expect 15 more to launch this year -- and increases the fleet per city," added Nowak.

Waymo, for its part, is in 10 U.S. cities. It's a leader in what is becoming a crowded field. There are thousands of robo-taxis operating in the U.S. and China, enabled by companies such as Waymo, Tesla, Pony.ai, and others. Wall Street estimates predict at least a doubling of robo-taxi activity each year for the next few years.

Robo-taxi growth keeps Nowak bullish on Alphabet stock. He rates Buy. His price target is $330 per share. Waymo isn't the only reason. "Continued AI-driven platform-level innovation on Search, YouTube, Cloud, and....other offerings," help.

Things are going well for Waymo and its parent. Still, Alphabet stock has been struggling lately. Coming into Thursday trading, shares were down almost 17% from a 52-week high of $349 reached in February, leaving Alphabet stock down about 7% year to date. Essentially, all of that year-to-date decline has come since fighting began in Iran.

Wall Street doesn't see a problem. Almost 90% of analysts covering the company rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 typically ranges from 55% to 60%. The average analyst price target for Alphabet stock is about $380 a share, up from about $335 at the start of 2026.

Still, higher interest rates and oil prices have made investors wary of just about everything, including the massive amounts being spent on AI computing. Alphabet is expected to spend more than $170 billion on new equipment in 2026, according to FactSet, up from $91 billion a year ago.

That will eat up a lot of operating cash flow. The idea, of course, is that spending will generate a return down the road.

Some of that return should come from Waymo's AI-trained robo-taxi service.

Alphabet shares were down 2% in early trading at $285.27 on another weak day for the stock market. The S&P 500 and Dow Jones Industrial Average were off 0.8% and 0.4%, respectively, with benchmark oil prices up more than 4%.

Write to Al Root at allen.root@dowjones.com

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March 26, 2026 10:49 ET (14:49 GMT)

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