Hey, what's up, everyone? Welcome back to my world of socks and welcome back to my Ask Ale series, where I take a question or request from the audience and I make a video for it, which in today's video, we'll be answering Tim's question from the video suggestions tab in our community discord, where he posted this. He said, Hey, Ale, with Tesla's recent rise, I started looking deeper into their markets.
Could you give me some names to look into? for the robo taxi market. I realize that it's a slow moving market at the moment, but like you, I'm always looking out long term. So if you can give me even just a couple stocks to keep on radar for this, I'd really appreciate it.
Thank you for all your hard work. I love the channel. Well, thank you, Tim.
I'm very happy that you enjoy the channel. It means a lot to me. Thank you for being a member too. And as for your question, by the way, I love how detailed you were in explaining. why you want this video, I'm always going to be choosing these comments first that actually take the time to explain their question and why they want it answered.
So thank you for that. But as far as robo taxis go, robo taxi stocks, I should say, well, I'm just going to tackle your question like this. I'm going to give you my personal top five favorite robo taxi stocks for the long term. I'm looking at it as really if.
I want stocks for the robo taxi market, what would be the top five companies that I would buy into myself specifically for that type of exposure in the future? And I'll just go in the order from top to bottom to make it easy. So for stock number one, my overall favorite of the list might surprise you, but I'm actually not going to go with Tesla at number one.
Instead, I'm going with Google ticker symbol G O O G L. And the reason is very simple. Like Tim said, The robo taxi market is going to take time until it fully develops into the hyper growth market that we all kind of expected to be longer term, which will happen, by the way. We all know just how incredibly more efficient and time saving driving will be once it's autonomous.
Also disrupting the current ride hailing market by conveniently calling for a cab through an app and paying a much smaller fee for each ride because of not having to pay for any drivers. And all of that will drive up demand, sending the market soaring, which analysts around the world really projected to be worth trillions of dollars long term. Not to mention, by the way, all the other benefits of just autonomous driving in general, especially in logistics, which is already worth trillions and would likely become even more important over time, making travel and shipping and transportation just so much cheaper and more efficient, creating really a boon to the entire economy. So it's going to be very important over time.
But. the big caveat is that it is going to take a significant time until that technology is perfected and the regulations allow for it to even happen safely. And because of that, you know, having a stock like Google, who actually does so many other things on top of autonomous driving, well, I think it makes it just so much more attractive and really safer of an investment, which in their case, they have number one market share in digital advertising, email, web browser, smartphone operating system.
web search, video streaming, they're third in cloud, and so much more. They're even number one in mapping, which is also going to be obviously very important for autonomous driving. But speaking of which, they also own Waymo on top of everything else, which admittedly is still relatively small in the grand scheme of things, but it's been around for years developing their technologies, and they've even started to ramp up at a faster rate more recently. going from around 10,000 weekly paid autonomous rides up to over 100,000 in just the past year.
That's a 10 times increase in only 12 months. Plus, they also just rose over $5 billion in new funding to expand the robo-taxi service into new markets next year. Which, by the way, that funding also means that the company is already worth over $45 billion in valuation just as a subsidiary for Google alone. Now, Google stock itself is up a lot like.
you know, most other stocks in the market right now. But the valuation is actually still pretty attractive with a PEG ratio that is shockingly still cheaper than the sector because of their incredible growth at their already massive size. In fact, they're doing around 300 billion in sales per year and are still somehow growing at a double digit rate.
So. You know, if you tell me that I can get all of this for that price and even some solid exposure into the robo taxi market too with Waymo as a subsidiary. Well, yeah, I'm going to take that all day.
Google is already my number one, I would say, favorite stock in the market just on its own. And I love it for this reason here too. Now, with that said, though, moving on to stock number two, I really can't do a robo taxi video without including the most hyped name in the space for sure.
The most talked about. gonna have to go with Tesla. Ticker symbol TSLA, which I can actually make the RoboTaxi case for very simply. First of all, nobody is at the level of Tesla when it comes to autonomous driving.
In fact, it's estimated that they're already driving over 5 million miles of full self-driving every single day, whereas Waymo, for comparison, is only doing a few thousand, and they're likely the biggest competitor at the moment. But this isn't even the... I would say biggest reason why I feel they're so far ahead, that honor goes to the millions of customers out there on the road doing all the hard work for Tesla for free, mind you, collecting hundreds of billions of miles of data that can be used to train their algorithms and their neural network.
Now, you might be thinking, yeah, but not every Tesla out there is, you know, using full self-driving. Guys, that doesn't even matter. Tesla has something called shadow mode that is running in the background, running in the background.
of their vehicles and it's generating control inputs without actually executing them and then it analyzes the discrepancies between those inputs and the actual maneuvers and actions that are done by the drivers so that the entire platform can learn from them and become even smarter it's pretty crazy and that giant benefit alone that they have over the competition i think will make tesla's platform perform much better than the rest over time not to mention the fact of course that tesla already does everything in-house with their own chips and even super competing platform called Dojo. Obviously, we only got a glimpse of this potential at their recent Robotaxi event, but the fact that Tesla makes their own cars and has all these capabilities, all the hardware and software for autonomy, means they'll be able to scale up much faster than you might think too, which at scale, they're projecting that the Robotaxi rides will be several times cheaper than traditional ride hailing services per mile, while even being lower than personal car ownership too. That's pretty wild.
And with the service already planning to launch in California and Texas by next year, it's just another reason why so many analysts are so bullish on the stock, like ARK Invest, for example, who predicts RoboTaxi revenue will make up around 44% of their total and a whopping 64% of their profits too, helping lift the stock up to their 2027 target of $2,000 per share. For context, Tesla currently trades for around $300 today. Now, granted, that price has skyrocketed this past month following the presidential election of Trump, which Elon has become very close with, even helping him get elected.
And even that, too, though, should come back, I would say, to help Tesla, since probably the biggest hurdle of all for robo-taxis will be government regulation. Well, regardless of how you feel about Elon or Trump politically, you have to admit that those two are always talking and kind of campaigning. on deregulation.
So I wouldn't be surprised at all if that partnership actually ends up helping Elon Musk and Tesla to get to market faster with RoboTaxi 2. Now, I admit that I'm not very excited about where the stock currently trades right now, considering the lower growth that they're experiencing in this currently weak economy. But longer term, especially for the RoboTaxi market, Tesla does have a lot of future potential. All right, now I'll grant you that Tesla stock is pretty expensive at the moment, but if you want a much cheaper option for the robo taxi market, you might want to consider a Chinese alternative like Baidu, ticker symbol B-I-D-U, who, by the way, is also extremely similar to Google, our number one pick, with currently the most searched market share in China, the third most cloud, a giant player in AI with actually more AI patents than any other company in the entire world.
But it also has... giant exposure to the robo taxi market through their subsidiary Apollo, just like Google. Google has Waymo, Baidu has Apollo.
And by the way, Apollo is no joke either. In fact, they were the very first robo taxi service to get approved in China. And yet, like I said, this is a much cheaper stock. In fact, they're actually negative over the past 10 years, having lost well over half of their entire value and leaving a dirt cheap valuation. with PE ratios that are over 40% cheaper than the Sector 2. Now, of course, the reason for that is because they are Chinese.
There's a lot of inherent risk from being a Chinese stock because of their VIE structures that leave little shareholder rights, especially for foreign shareholders, among other issues too, like rising tensions with the US, which could potentially get even worse under a Trump presidency, so you've been warned about that. However, there's also some benefits to being a Chinese company, especially in the robo-taxi market. not only because China has over half of the world's electric vehicles, but they were also the fastest to approve robo-taxi operations, with Apollo themselves already planning to launch in over 100 Chinese cities by 2030. Which, by the way, because Baidu is so strong in this area, they were even chosen by Tesla to partner up with in the country, providing them with their extremely valuable mapping data.
So I just think that there's a ton of future potential for this company, and also the stock. if it can really overcome some of those hurdles of being higher risk because of the Chinese factor. Now, if that Chinese factor is just too high risk for you, I totally understand.
I'm going to throw an American company at you here for stock number four, and one that may actually surprise you because I would actually own this stock regardless of the Robotaxi business, and that is the mighty Amazon, ticker symbol AMZN, is already one of my personal favorite and largest investments. And the reason why, again, I see this very similar to something like Google, where they already have this insanely large and robust and well-diversified business, you know, doing over half a trillion dollars in sales every year, and yet are still growing by a double-digit rate, with dominance in online shopping and cloud computing, number one market share, but are still expanding in other areas too, like digital advertising, video streaming, gaming. And yes, even electric vehicles and autonomous driving. Particularly important for today's video being their Zoox subsidiary that makes purpose-built vehicles with autonomy in mind from the ground up.
These are pretty cool. They're larger in size, kind of like a mini transport bus where you can even roll into with wheelchairs even. And they have no steering wheel, no driver.
And they're just fully autonomous. And they're already piloting these. the service across major cities like San Francisco, Seattle, and Las Vegas with paid rides coming this year and even planned expansion into Austin and Miami early next year too.
Now, I know it's not the first thing that you think of when looking at Amazon, but don't sleep on how insanely large and ambitious this company is and how easily they can fund all of this research and development and operations into autonomy. They absolutely have the funds to scale up quickly there too. And even though the stock is pretty much always trading for a high rich price, you have to consider the high quality that you get back in return for that.
Now, I do acknowledge that Amazon stock trades for a premium valuation, but if you want something that is insanely cheaper than that, well, stock number five, I actually think is another option here worth considering, a much cheaper one, and that is General Motors, Sigur Simbel GM, which not only has Really strong car brands selling very well with number one market share in trucks, number one in SUVs, and even number one market share just across the board for total vehicles, even ahead of other giants like Ford, Honda, Toyota, and more. But they're also fast growing with EVs too, with those sales soaring by 60% last quarter, helping them now reach about double digit market share in America. Plus, they're also in the robo taxi space too through their subsidiary Cruise. which has been piloting a self-driving service for years, really. And while it has faced some serious challenges over that time, particularly an accident last year in California that took them out of that market for now, well, Cruise is at least back on the road now in major cities like Texas and Arizona.
And they also have plans to launch a revamped Chevy Bolt EV with the Cruise branding and technology to expand. into more cities and markets next year. Now, granted, the accident in California has been a major setback for the company, really slowing down their progress in autonomous driving.
But the fact that Cruise has been developing these technologies for years and that GM is also making their own EVs for them too, well, it means that they should be able to bounce back fairly quickly and then scale much faster than maybe other legacy automakers out there. And yet, I would argue that this talk kind of trades like... as if it doesn't even have those AV advantages, trading for only around a five earnings multiple and is even more than 60% cheaper than the sector by most metrics. So it's almost like you're buying GM stock just for that original company that is doing well, but then you also get the cruise business as a free add-on for that future potential.
All right, that does it for my five picks here. However, I will just throw one honorable mention at you guys too in NVIDIA. It's a little more of an indirect play because they're not actually making robo taxis themselves, but they have autonomous driving software that they license out to other car companies. And they, of course, develop the chips that are used for powering most supercomputer systems out there that autonomous driving platforms rely on.
And even the chips for cars to not to mention just powering AI in general as a company and everything that they do. So there's a lot to love about NVIDIA. And I also think that they're Pretty good play maybe like an indirect play on robo taxis as well.
It's one to consider for sure But hey, what do you guys think? Do you agree with my picks? And if not? What would you take out and put in its place instead?
I would love to hear your thoughts about that But thanks again for all of your support my friends Hope you enjoyed the video and I will catch you in the next one. Alright, take care everybody. Bye.
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