Uber shares have fallen 8% this year, dragged down by worries that the ride-hailing giant is losing ground to autonomous taxi operators led by Waymo. Yet, the market's pessimism appears excessive, as the company still has multiple growth engines at its disposal.
Over the next several years, Uber should be able to sustain robust growth, expand profit margins, and stay competitive in the autonomous driving arena. At the same time, its valuation is at its lowest level since turning profitable in 2023, with the market failing to fully credit its fast-scaling delivery business, improving operating margins, and ample free cash flow. Currently, Uber's enterprise value trades at just 2.6 times next year's projected revenue, compared to the S&P 500 average of 4 times — a discount that seems unjustified.
Where the market has gone wrong
The main bear case for Uber centers on the belief that Alphabet's Waymo is squeezing its core ride-hailing business. The two companies have a deep history: nearly three years ago, Uber was the first to offer Waymo's robotaxi service on its app in Phoenix, later expanding to other cities. This arrangement allowed Uber to tap into rising demand for autonomous rides without bearing the heavy R&D costs of building its own fleet. But the two are increasingly going their separate ways. In May, Uber dropped Waymo vehicles from its Phoenix app, while Waymo continues to operate its own app there. By 2028, Waymo plans to launch its standalone app in Atlanta and Austin, Texas, no longer relying solely on Uber for bookings. In those cities, Uber's platform can still integrate other autonomous driving providers.
Uber doesn't necessarily need Waymo to capture its share of the robotaxi market. Its existing platform network is a formidable advantage: other Waymo competitors are eager to list their services on Uber. Amazon's autonomous vehicle subsidiary Zoox has announced it will launch its robotaxis on Uber's platform in Las Vegas later this year. Uber has also struck partnerships with several players, including UK-based autonomous driving startup Wayve, Michigan-based May Mobility, and Nuro, which is equipping Lucid cars with its self-driving system. As TD Cowen equity analyst John Blackledge notes, Uber's platform already hosts autonomous vehicles in seven markets, with plans to expand to 15 by year-end. The company has set a target of carrying the most autonomous ride-hailing orders globally by 2029.
Robotaxis will take years to fully replace human drivers. During this transition, Uber's long-standing relationships with local governments can help it assist autonomous partners in launching operations in major cities like New York, Chicago, and Boston. Blackledge points out that Uber has maintained communication with local authorities for years, and its current strategy involves building hybrid mobility networks in cities like New York, where the platform offers both autonomous and human-driven rides. This model addresses two key government concerns: potential job losses for drivers and the safety of autonomous vehicles across diverse road conditions. For autonomous startups, plugging into Uber's platform offers a fast track to entering multiple cities — provided they eventually launch their own apps, though whether consumers will download a proliferation of separate apps remains an open question.
Notably, in markets where Waymo competes head-on with Uber, such as San Francisco, its expansion hasn't significantly dented Uber's overall revenue growth. Analysts broadly expect Uber's revenue growth to slow from 18% in 2025 to 11% this year due to accounting rule changes in the UK, but S&P Global Market Intelligence data suggests growth should rebound to 15% in 2027, driven by strong ride-hailing demand. If Uber meets its third-quarter gross bookings guidance, it will mark the fifth consecutive quarter of order growth above 20%. Jefferies analysts named Uber a top pick last week, citing strong bookings data and progress in US autonomous operations. They noted that the bull case for Uber is becoming clearer heading into 2027.
One potential risk to Uber's autonomous strategy: the company could pivot from its current model of integrating third-party providers to building its own self-driving technology. A previous attempt under former CEO Travis Kalanick was abandoned. While going solo would reduce external dependencies, it would require a lengthy and capital-intensive development cycle.
The delivery business and valuation opportunity
For investors, the biggest opportunity lies in the undervalued delivery segment, anchored by Uber Eats. In the quarter ending in June, delivery revenue grew 28% year-over-year to $5.2 billion, while ride-hailing revenue rose just 1% during the same period. Ride-hailing remains larger at $7.4 billion in quarterly revenue, but delivery is catching up quickly. Compared to competitor DoorDash, Uber's delivery business looks significantly undervalued. DoorDash generated $1.2 billion in EBITDA in 2025 and trades at roughly 75 times that figure. Uber's delivery segment posted $3.7 billion in EBITDA over the same period. Applying DoorDash's valuation multiple, Uber's delivery business alone would be worth around $270 billion — well above Uber's entire current market cap of roughly $150 billion.
Another signal of investor pessimism: Uber's discount to DoorDash has widened to a record high. Throughout most of 2023 and 2024, Uber's forward P/E ratio commanded a premium to DoorDash's; now the tables have turned. Uber trades at 17.7 times forward earnings, while DoorDash sits at 33 times. Beyond integrating third-party autonomous vehicles, Uber has other levers to support its share price. The company announced a $20 billion share buyback program in August last year but has only used about a quarter of it so far. Additionally, its growing and stable free cash flow — which totaled $9.8 billion at the end of last year — can fund autonomous-related investments.
Note: This content is for educational purposes only and does not constitute investment advice.
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