Alphabet Inc Research Report

By Admin•

Alphabet Inc. (NASDAQ: GOOG), the parent company of Google, is no longer just an internet search giant—it’s steering the future of urban mobility. With its autonomous driving division, Waymo, at the helm of a growing robotaxi movement, Alphabet stands out as a top pick for investors betting on the next frontier in artificial intelligence, transportation, and mobility-as-a-service.

Robotaxis Set to Disrupt the Ride-Hailing Industry

According to Morningstar’s latest equity analyst report, robotaxis currently make up less than 1% of global ride-hailing trips. But by 2035, that number could skyrocket to 50%. This shift represents a seismic disruption in transportation—and Alphabet’s Waymo is projected to be a primary beneficiary alongside Tesla.

Waymo has already launched limited robotaxi services, making it the first and only provider with operational deployments. Tesla is expected to enter the market soon, but Waymo’s lead in regulatory partnerships, real-world testing, and software development gives it an early advantage.

Why Robotaxis Are Inevitable

Robotaxis offer multiple advantages over human-operated ride-hailing:

  • Cost Efficiency: Lower labor costs mean cheaper fares for consumers.

  • Safety: Autonomous vehicles statistically outperform average human drivers in safety metrics.

  • Utilization: Robotaxis can make 50% more trips per day than their human counterparts, driving higher ROI per vehicle.

These factors make the widespread adoption of autonomous vehicles not just plausible—but economically compelling.

Alphabet's Strategic Advantage: A Profitable Asset-Light Model

Morningstar emphasizes that Alphabet and Tesla are likely to pursue an asset-light business model for their AV ventures. In this model, Alphabet would sell autonomous vehicle systems (hardware + software) and license its technology to fleet operators or ride-hailing services, instead of owning the fleet itself.

This model is both capital-efficient and highly scalable, especially when paired with Waymo's world-class AI capabilities. Uber and Lyft, which currently lack in-house AV solutions, are expected to partner with players like Waymo—further strengthening Alphabet’s position.

Federal Regulation Could Accelerate Deployment

Currently, AV companies must secure approval on a state-by-state basis in the U.S., which significantly slows expansion. However, under the current administration, Morningstar anticipates a push for federal regulation—a development that would streamline operations for AV vendors and likely accelerate robotaxi rollout.

Waymo, which has long collaborated with regulators, stands to benefit more than competitors from such a unified framework.

Valuation: Alphabet Is Undervalued Despite Strong Fundamentals

As of July 23, 2025, Alphabet’s Class C shares (GOOG) were trading at $191.51, while Morningstar’s fair value estimate remains at $237, indicating significant upside potential. Alphabet’s Price/Fair Value ratio of 0.81 places it firmly in 4-star territory—making it a compelling value play among tech giants.

Financial Highlights:

  • Market Cap: $2.32 trillion

  • Operating Margin (2025 forecast): 32.5%

  • EBITDA Margin (2025 forecast): 38.3%

  • Net Margin (2025 forecast): 32.4%

  • EPS (2025 forecast): $10.34 (expected to grow to $15.47 by 2029)

  • Free Cash Flow (2025 forecast): $55.2 billion, rising to $113.3 billion by 2029

  • Revenue (2025 forecast): $389.8 billion, growing at a 10.1% five-year CAGR

Alphabet is also beginning to reward shareholders more directly, with dividends expected to rise from $0.80 per share in 2024 to $1.02 by 2029.

Comparing Alphabet to the Tech Titans

When stacked against its peers, Alphabet offers stronger upside potential based on Morningstar's price/fair value assessments:

  • Alphabet: 0.81 (undervalued)

  • Amazon: 0.95

  • Apple: 1.07 (overvalued)

  • Microsoft: 1.00 (fairly valued)

Conclusion: Alphabet Is the Smart Bet on Autonomous Mobility

Waymo isn’t just a side project for Alphabet—it’s the company’s gateway into the trillion-dollar mobility market. With a strong competitive moat, superior technology, and a scalable business model, Alphabet is uniquely positioned to lead the robotaxi revolution.

For long-term investors, GOOG offers an enticing combination of growth, innovation, and undervaluation. As autonomous vehicles reshape transportation, Alphabet may not just ride the wave—it may own the road.