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My investment strategy within my Stocks and Shares ISA is mainly centred on capturing some of the major structural trends shaping the global economy. One massive shift I’m bullish on over the next two decades is the rise of autonomous vehicles and robotaxis.
Today, most people in the UK still think the idea of cars driving themselves sounds more like sci-fi than reality. But this technology is already well-established in a handful of large US cities, where more than 10m robotaxi rides have now taken place.
Earlier this week, it was announced that Waymo will be bringing its fully autonomous taxi service to London’s roads in 2026. According to the firm’s data, human drivers are 12 times more likely to be involved in injury-causing accidents with pedestrians than its own robotaxis (which don’t get distracted by phones, passengers, tiredness, etc).
Here are two S&P 500 shares that offer a chance to invest in this space. I think both are worth considering.
Alphabet
Waymo is part of Alphabet (NASDAQ:GOOG), the tech conglomerate that also owns Google and YouTube. Therefore, investors would only be getting indirect exposure here because Waymo today is still only a small part of the overall holding company.
However, it’s a growing part, because Waymo has now driven over 100m fully autonomous miles on public roads in five US cities (Phoenix, San Francisco, Los Angeles, Austin, and Atlanta). It’s expanding to Washington and Miami in 2026.
As such, Waymo already calls itself the “world’s most experienced driver“. And it’s still very early days.
Now, because Waymo is not a standalone public company, its figures aren’t reported independently. They’re bundled into Alphabet’s ‘Other Bets’ segment. In Q2, this generated $373m in revenue, up slightly year on year, but the operating loss was a hefty $1.25bn.
Safe to say, Waymo is burning through a lot of cash and isn’t going to be profitable for many years. But Alphabet generates mountains of cash, even though Google search is facing potential challenges from the rise of ChatGPT.
Emerging AV platform
The next stock is Uber (NYSE:UBER). At first glance, the rise of AVs might seem a direct threat. After all, if consumers can just book a robotaxi from Waymo, Uber’s platform could slowly become less relevant.
However, the company has partnered with over a dozen AV firms, including Wayve in the UK, WeRide, Momenta and Baidu’s Apollo Go in Asia, and May Mobility, Lucid, and Nuro in the US. Waymos are also booked through Uber in Atlanta and Austin.
The aim appears to be to make AVs almost commoditised, while keeping its platform as the place where people go to book taxis (robo or otherwise). If driverless taxis prove cheaper, this could eventually drive more bookings/activity on Uber’s app.
The elephant in the room here — for both Waymo and Uber — is Tesla. It’s piloting a different AI-based self-driving technology, which if successful could be far more scalable. Tesla’s robotaxis could outcompete Waymo on pricing, while ignoring Uber as a partner altogether.
The reason I haven’t included Tesla in this two-stock selection is due to valuation. Right now, the shares are trading at a sky-high 172 times forward earnings.
For Uber and Alphabet, this figure is in the mid-20s, thereby offering growth at a much more reasonable price.
