How big can Waymo’s business get in 2025? Via Investing.com

Investing.com — Waymo, Alphabet’s (NASDAQ: ) self-driving unit, has seen increased adoption in recent years. According to analysts at Morgan Stanley, by 2025, Waymo could command a low- to mid-single-digit percentage share of ride-hailing markets in key cities such as Phoenix and San Francisco.

Waymo’s business has seen growth, reporting a roughly 10-fold increase in weekly trips compared to May of the previous year.

By August 2024, Waymo was making 100,000 trips per week, a significant jump from 10,000 trips in May 2023.

This rapid expansion is further supported by its expansion into new geographies, including Los Angeles neighborhoods, Phoenix airport services and the San Francisco Peninsula.

Waymo’s miles driven have also grown exponentially, with its most mature market, Phoenix, seeing roughly 350% year-over-year growth in the first half of 2021.

Through 2025, the company is expected to continue on this trajectory, driven by technological advances and growing geographic reach.

The base case suggests that Waymo will achieve a 4 percent market share in Phoenix and 3 percent in San Francisco. This corresponds to an estimated revenue of $76 million in Phoenix and $64 million in San Francisco in 2025.

In addition, Waymo’s partnership with Uber (NYSE: ) is critical to achieving these numbers, as some trips in Phoenix will be made through Uber’s platform. This partnership is expected to contribute to Waymo’s ability to secure a portion of Uber’s gross bookings in these regions.

Waymo is currently operational in four cities, namely Phoenix, San Francisco, Los Angeles and Austin. However, the company has mapped more than 25 cities and continues to expand.

San Francisco, Los Angeles and Austin are growing at twice the rate of Phoenix, with each new city launch hitting key milestones faster than its predecessor.

Morgan Stanley points out that the pace of city launches will be a crucial factor in determining the size of Waymo’s business through 2025.

“With a presence in only 3 of the top 20 US metro areas (Austin is not a top 20 metro), Waymo still only covers a fraction of the total US population,” the analysts said.

Morgan Stanley forecasts strong revenue growth in Waymo markets. Waymo’s revenue is expected to grow 109% year-over-year in 2025, with total revenue across all markets (Phoenix, San Francisco, Los Angeles and Austin) reaching $180.9 million.

These forecasts do not include potential revenue from the launch of new cities, which could further accelerate growth.

While Waymo’s growth is promising, challenges remain. Technological hurdles, safety concerns, regulatory requirements and investment needs make full autonomy a multi-year challenge.

Morgan Stanley analysts warn that while Waymo’s business may grow significantly by 2025, widespread adoption of autonomous vehicles in all cities may still be a distant goal.