Al Root
Waymo, Alphabet's robo-taxi business, is getting a big step up in its valuation. That's both good and bad news for its robo-taxi competitor Tesla.
On Saturday, Bloomberg reported that Waymo was looking to raise $16 billion, valuing the company at $110 billion. It isn't the first report of the $110 billion. Still, it looks more likely to happen. What's more, the valuation is up about 144% from its $45 billion valuation in late 2024.
Waymo didn't respond to a request for comment. Alphabet controls Waymo, and would participate in the capital raise, but the tech giant has other investors in its robo-taxi business, too.
The money would presumably be used to expand its robo-taxi business. Waymo operates fully in five U.S. cities, completing about 450,000 fully autonomous rides a week, with more cities coming.
The expansion hasn't been without its challenges. A Waymo vehicle hit a pedestrian on Jan. 23 in Santa Monica, Calif. "The event occurred when the pedestrian suddenly entered the roadway from behind a tall SUV, moving directly into our vehicle's path," said the company in a news release. "Our technology immediately detected the individual as soon as they began to emerge from behind the stopped vehicle. The Waymo Driver braked hard, reducing speed from approximately 17 mph to under 6 mph before contact was made."
Waymo's data show that its robo-taxis have 80% to 90% fewer incidents than human drivers in comparable situations. Still, investors and regulators will have to wrestle with what incidents mean for the technology, which is rapidly spreading across the country.
Tesla launched its robo-taxi service in Austin, Texas, in June and plans to operate in nine cities by mid-2026.
As for the valuation, it's a big step up, but $110 billion is less than 3% of Alphabet's $4.1 trillion market value. It's also less than 8% of Tesla's $1.4 trillion market value.
That's arguably a bigger deal for Tesla than it is for the Google Search parent. Alphabet is expected to generate more than $210 billion in earnings before interest, taxes, depreciation, and amortization, or Ebitda, in 2026. And its stock, propelled by search, AI, Cloud, and YouTube, trades for about 32 times estimated 2026 earnings.
At $110 billion, Waymo is a nice side project.
Robo-taxis are more existential for Tesla. It is expected to generate about $15 billion in 2026 Ebitda, and its shares trade for north of 200 times earnings, mostly because of CEO Elon Musk's bet on AI applications such as robo-taxis and robots.
Wall Street's bullish analysts estimate Tesla's robo-taxi opportunity at the hundreds of billions or trillions of dollars, with analysts looking at the 3 trillion-plus miles Americans drive annually and projecting what share robo-taxis will eventually capture of that market.
There seems to be a paradox between Waymo's valuation and the robo-taxi valuation embedded in Tesla's stock price.
To be sure, Tesla has some advantages, such as the ability to manufacture its own cars and all of the telematic data it's been collecting on driving for years. Tesla also has a nascent robotics business that excites investors.
Tesla recently announced it would stop selling its higher-priced Model S and X vehicles and turn that capacity into a facility to mass-produce humanoid robots.
Still, the Waymo valuation is a watch item for investors. It either means Waymo isn't fully valued within Alphabet, or that investors are a little too optimistic about Tesla's robo-taxi potential.
The truth is probably in the middle.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
February 01, 2026 13:26 ET (18:26 GMT)
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