To The Moon

$Alphabet(GOOGL)$'s patience with Waymo is indeed a long-term strategic play that analysts predict will yield significant returns by 2040.

Alphabet's sustained investment in Waymo is a bet on a transformative technology with a massive addressable market. While the path to profitability has been lengthy and expensive, Waymo's technological leadership, safety-first approach, and expanding operational footprint position it to be a dominant player in the autonomous vehicle industry by 2040, ultimately yielding substantial returns for Alphabet and its shareholders.

In this article I would be sharing and exploring the breakdown of why this patience is likely to pay off even though the market is not pricing it in today.

Waymo: From “Other Bet” to $500B+ Opportunity

Explosive Growth Trajectory

• 250,000+ weekly rides in 2025, up from 16,000 in 2023—a 1,500%+ increase.

• Expansion into 10+ cities by 2026, including Tokyo and Austin.

• Lidar and hardware costs down 90% since 2017, improving unit economics.

• Forecasted valuation: $305B–$850B by 2030, up from ~$45B today.

AI Flywheel & Data Moat

• Waymo’s Carcraft simulation platform trains on 33M+ miles of real-world data.

• This data advantage feeds Alphabet’s broader AI ecosystem—think Gemini, Maps, and Search.

• Potential to license the Waymo Driver to automakers, logistics firms, and delivery networks.

Strategic Partnerships = Scalable Monetization

• Uber integration in Austin and Atlanta opens access to 10M+ users.

• Manufacturing partnership with Magna for cost-efficient vehicle production.

• Toyota alliance positions Waymo to tap Japan’s $15B AV market.

Why Alphabet’s Patience Could Pay Off

Strategic Takeaway

Waymo is Alphabet’s Tesla-like call option—a moonshot that’s quietly maturing into a real business. While it’s still burning cash, the network effects, data moat, and regulatory lead make it a likely winner in the autonomous race. By 2040, if Waymo captures even a fraction of the $1.5T global mobility market, Alphabet’s early patience could look visionary.

In this section, I will be sharing on the DCF-style valuation model for Waymo’s potential contribution to Alphabet (GOOGL) by 2030 and 2040, based on current projections and assumptions from analysts like Deepwater Asset Management and Morgan Stanley.

Waymo DCF-Style Valuation Model

Key Assumptions

 Valuation Output

2030 DCF Valuation

• Enterprise Value (EV): ~$305B–$350B range

• GOOGL’s Implied Stake Value: ~$213B–$245B

• Impact on GOOGL Market Cap: +12–15% upside if unlocked via IPO or dividend

2040 DCF Valuation (Aggressive Scenario)

• Enterprise Value (EV): ~$600B–$850B

• GOOGL’s Implied Stake Value: ~$360B–$510B

• Impact on GOOGL: Could rival or exceed YouTube’s contribution to Alphabet’s valuation

Strategic Insight

Waymo is currently a deeply undervalued asset within Alphabet’s “Other Bets.” If it captures even a fraction of the $1.5T global mobility market, its contribution could be transformative. The key catalysts:

• Spinout or IPO unlocking hidden value

• Licensing the Waymo Driver to OEMs and logistics firms

• AI data monetization via Carcraft simulation platform

I feel that in order for us to understand how Waymo would performed in the $1.5T global mobility market, we need to understand Waymo valuation by doing a comparison with $Tesla Motors(TSLA)$ using a side-by-side DCF-style valuation model based on 2030 and 2040 projections.

This will help you assess which autonomous mobility play might offer asymmetric upside.

DCF Comparison: Waymo vs. Tesla Robotaxi (2030 & 2040)

Strategic Takeaways

• Tesla’s model is more aggressive: It assumes full autonomy, global scale, and ultra-low cost per mile. If it works, the upside is exponential—but execution risk is high.

• Waymo is more conservative: Slower rollout, higher per-ride pricing, but strong regulatory lead and data moat.

• Valuation asymmetry: Tesla’s robotaxi thesis could 10x its current market cap if realized. Waymo could add 15–20% upside to Alphabet if spun out or monetized.

In the following section I would be sharing the valuation waterfall and a scenario matrix comparing Waymo and Tesla’s robotaxi ambitions through 2040.

Valuation Waterfall: Waymo vs. Tesla Robotaxi (2040)

 Insight: Tesla’s vertically integrated model and higher margin assumptions drive a much larger EV, but Waymo’s contribution to Alphabet could still be transformative if unlocked via IPO or spinout.

Scenario Matrix: Adoption Curve × Margin Sensitivity (2040 EV)

 Note: Tesla’s valuation is hypersensitive to adoption and margin assumptions. Waymo’s is more linear but still offers 5–10× upside from current implied value (~$45B–$60B).

Strategic Takeaway

• Waymo: A slow-and-steady compounder with regulatory lead, safety moat, and potential IPO unlock.

• Tesla: A high-beta moonshot with massive upside—but also execution and regulatory risk.

We have looked at the different scenarios from valuation, and now we will need to look at the impact of a Waymo IPO on Alphabet’s stock price and also simulate a Tesla downside case if robotaxi adoption stalls.

We will present these two scenarios : (1) the potential upside to Alphabet (GOOGL) from a Waymo IPO, and (2) a downside case for Tesla (TSLA) if robotaxi adoption underdelivers.

This will help us assess asymmetric risk/reward across both plays.

Scenario 1: Waymo IPO Impact on Alphabet (GOOGL)

Assumptions

Impact Calculation

• GOOGL’s Stake Value Post-IPO: 60% × $350B = $210B

• Incremental Value Unlock: $210B – $45B = $165B

• Stock Price Impact: $165B ÷ 12.5B shares = +$13.20/share

• % Upside to GOOGL: ~8.7%

If Waymo IPOs at $350B and the market re-rates GOOGL accordingly, the stock could see a ~9% uplift, assuming no multiple compression elsewhere.

Scenario 2: Tesla Robotaxi Downside Case

Assumptions

Downside Simulation

• Revised Robotaxi EV: $1.2T (vs. $5T bull)

• TSLA Re-rated Market Cap: ~$600B–$700B

• Stock Price Impact: ~30–40% downside from current levels

If Tesla’s robotaxi rollout stalls due to safety issues, regulatory pushback, or tech limitations, the stock could retrace to $180–$220, especially if FSD monetization lags.

Strategic Comparison

In the next section I will be doing the bull–bear–neutral matrix for Waymo (Alphabet) and Tesla Robotaxi, overlaid with PEG ratios and FCF yields to spotlight valuation asymmetries as of mid-2025:

 Bull–Bear–Neutral Matrix: Waymo vs. Tesla Robotaxi

 Note: PEG = Price/Earnings-to-Growth; FCF Yield = Free Cash Flow / Market Cap. Waymo’s PEG is inferred from Alphabet’s consolidated growth, while Tesla’s reflects high-growth expectations priced into its robotaxi thesis.

Strategic Insight

• Waymo offers valuation asymmetry on the upside: modest PEG, improving FCF yield, and optionality that’s not fully priced in.

• Tesla is valuation asymmetric on the downside: high PEG, low FCF yield, and robotaxi success already embedded in its market cap.

Final Note

Alphabet's patience is rooted in the understanding that this is a long-game technology. Their substantial financial resources allow them to absorb these initial losses while Waymo builds a robust, safe, and scalable service.

The long-term projections for revenue, market share, and cost reduction suggest that the substantial investment in Waymo will eventually become a significant contributor to Alphabet's overall valuation and profitability.

Summary

Alphabet's long-term patience with Waymo is a strategic bet on a massive future market. By 2040, the autonomous vehicle (AV) market, especially ride-hailing and trucking, is projected to be worth trillions.

Waymo, with its decade-plus lead in technology, safety-first approach, and expanding operations across key US cities, is exceptionally well-positioned to capture a significant share.

Their partnerships, declining operational costs, and increasing scale – including a new manufacturing facility and plans for aggressive expansion – are setting the stage for substantial revenue generation and high profit margins.

While initial investments are heavy, Waymo's established lead and robust system promise to make it a dominant force, ultimately yielding impressive returns and contributing significantly to Alphabet's valuation.

Appreciate if you could share your thoughts in the comment section whether you think Alphabet Google would be able to benefit from Waymo’s IPO.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.