Recently, I was looking at the April factsheet for this fund, as well as a recent Q1 regulatory filing, and I noticed that Ackman has made huge bets on two of my favourite US stocks. This suggests that he sees value in them at present.

Decades-long growth potential

The first stock I want to highlight is Amazon (NASDAQ: AMZN). At the end of Q1, it represented about 17% of Ackman’s total portfolio.

I’m not surprised that the hedge fund manager is bullish on this Mag 7 name. In my view, it has a ton of long-term potential.

This is no longer just a play on online shopping and cloud computing. Today, it’s a play on these industries plus AI chips, space satellites, self-driving cars, digital healthcare, and more.

Put all this together, and there’s potential for the company to get much bigger. I think it could easily double in size in the next five to seven years (Ackman is expecting earnings growth 20%+ over the medium to long term).

Amazon operates two of the world’s great, category-defining franchises between its Amazon Web Services (AWS) cloud business and its e-commerce retail operations. Both businesses are underpinned by decades-long secular growth trends.
Bill Ackman

As for the valuation, it doesn’t look stretched, despite the fact that the stock is trading near record highs. Looking at earnings forecasts for next year, the forward-looking price-to-earnings (P/E) ratio is only about 27.

At that valuation, I think the stock is worth considering. There are risks around AI spending, but overall, I see the risk/reward set-up as compelling.

A big bet on mobility

Another massive holding for Ackman is Uber (NYSE: UBER). At the end of Q1, this stock was over 15% of this portfolio.

Again, this doesn’t really surprise me. To my mind, Uber – with its scalable platform – has the potential to be a Mag 7-like name in the future.

The stock market clearly underappreciates the durability of Uber’s moat, the magnitude of its earnings growth, and the strategic role it will play in shaping the future of mobility.
Bill Ackman

Now, some investors see competition from robotaxi players such as Tesla and Waymo as a major risk here. However, the way I see it, lots of automotive companies will have robotaxis in the future and many of them will partner with Uber to connect with consumers.

It seems Ackman shares a similar view. “We believe that AV technology will not be a winner-take-all model and that third-party networks, and Uber in particular, have a valuable role to play”, he wrote in his company’s annual report.

At present, Uber trades at less than 20 times next year’s earnings forecast. And Ackman sees that as a ‘bargain’ as he expects earnings to grow by 30% or greater over the medium term.

I agree that it’s a bargain and believe it’s worth a look today. There’s no guarantee that it will do well given the changing automotive landscape but there’s certainly a lot of potential.

Should you invest £5,000 in Amazon right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Amazon made the list?

Edward Sheldon owns shares in Amazon and Uber.

The post Bill Ackman’s FTSE 100 growth fund is making a huge bet on these 2 AI stocks appeared first on The Twelfth Magpie.

Basically, if a stock isn’t related to semiconductors, space or energy, investors aren’t really interested. As such, top-class companies with long runways of growth are being shunned.

Here are two out-of-favour S&P 500 shares that Wall Street analysts reckon are undervalued. I think each one is worth considering today.

Down 23%

Let’s start with Microsoft (NASDAQ:MSFT), which has slumped 23% since October.

As the biggest software company in the world (Windows, Office, Teams, etc), investors fear its revenue streams could be vulnerable to rapid advances in AI.

Boiled down, this fear has three parts:

• New AI tools from Anthropic could limit pricing power.
• Microsoft 365 (M365) is primarily a seat-based (per-user) subscription model. If AI efficiencies lead to fewer employees, growth could slow.
• Microsoft’s huge investments in AI might not pay off long term.

Despite these risks, the stock looks cheap at just 21 times forward earnings. This is well below Microsoft’s average over the past few years.

Hedge fund manager Bill Ackman certainly sees value. In Q1, Ackman made the stock a core holding for Pershing Square, correctly pointing out that M365 is deeply embedded across millions of enterprises and is “nearly impossible to replicate” due to its identity, security and compliance infrastructure.

The company’s Azure platform is still the number two cloud player globally, while it also owns LinkedIn (1.3bn members), Xbox, and video games creator Activision Blizzard. So there’s a lot of product diversification here, as well as a 27% stake in ChatGPT maker OpenAI.

Meanwhile, Microsoft continues to spend billions on share buybacks every quarter, albeit at a slower rate than before. And finally, Wall Street analysts currently see solid value in the stock, assigning an average price of $559, which is 35% higher.

Down 26%

Next, we have Uber Technologies (NYSE:UBER), which has fallen 26% since November. This is another S&P 500 stock that a few prominent hedge fund whales bought in Q1.

• David Tepper’s Appaloosa Management boosted its Uber position by a massive 242%.
• Egerton Capital (John Armitage) increased its holding by 73%.
• Brad Gerstner’s Altimeter upped Uber to 10% of the portfolio.

What do they like here? Well, Uber continues to grow strongly, with trips increasing 20% to 3.6bn during Q1. Monthly active customers rose 17% to a massive 199m, while its Uber One membership reached 50m people.  

Also, the firm is firmly profitable nowadays. Net profit totalled $1.5bn in the quarter, up 39%, and free cash flow came in at $2.3bn.

As more customers and drivers join the platform, Uber’s network effect is getting stronger. It’s also expanding into travel bookings and continues to build out its high-margin digital ad business (both in-app and in-car ads).

Looking ahead, rising inflation is a risk to consumer spending, as is competition from Waymo and Tesla robotaxis. However, Uber is investing aggressively in dozens of self-driving firms, aiming to become the world’s largest facilitator of driverless trips in a few years’ time.

With the stock trading at 22 times forward earnings, and 43% below brokers’ average target, I reckon Uber is worth a look at $73.

Should you invest £5,000 in Microsoft right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Microsoft made the list?

Ben McPoland has positions in Pershing Square and Uber Technologies. 

The post Prediction: these S&P 500 stocks could rise 35% or more by 2027, according to Wall Street appeared first on The Twelfth Magpie.

However, its dominance is not in doubt, with more than 200m monthly users completing over 40m trips every day through its platform in the final quarter of 2025.

Looking ahead though, Uber is making moves that could see it become an even bigger business…

Building a super app

After starting out as a ride-sharing app, Uber expanded into food delivery and freight. Moving things from point A to point B, essentially.

In the past couple of years though, it has had success layering more services into its app. For example, I previously used Trainline to book train tickets. However, I now use Uber for this because I get Avios points after booking.

I’m also kept loyal by the Uber One subscription, which had over 46m members at the end of 2025. This gives me free or discounted delivery on orders from most restaurants and shops. As such, I use Just Eat far less often nowadays.

This week, the company announced a partnership with Expedia to offer in-app hotel bookings and expand travel services. Expedia hosts over 700,000 properties worldwide, so this could be a big deal.

I currently use Booking.com for hotels. Would I consider switching to Uber in future? Well, I might, as “Uber One members will earn 10% back in Uber One credits on all hotel bookings, plus they’ll save at least 20% on a rolling list of more than 10,000 hotels worldwide“. 

CEO Dara Khosrowshahi says there are too many apps knocking about, and Uber wants to help “people reclaim their time“.

In other words, why bother using Trainline for trains and coaches, Skyscanner for flights, Booking or Airbnb for hotels and holiday rentals, Deliveroo for food delivery, when I can just use Uber for everything?

The company also wants people to do online shopping on the app.

Uber is becoming an app for everything — helping people go, get, and now travel all in one place.
Dara Khosrowshahi

Are robotaxis a threat or an opportunity?

As exciting as this sounds — and I do think the long-term growth potential is very significant here — robotaxis do present a threat. Leaders like Tesla and Waymo have big expansion plans for self-driving taxis and they don’t necessarily involve Uber.

To counter this threat, the company has been signing partnerships with autonomous vehicle (AV) companies at a rate of knots. The incentive for Uber to make robotaxis a commoditised service is obvious and necessary.

However, I do have some concerns because the firm has committed $10bn to buy robotaxis for its network and take chunky equity stakes in various AV firms.

This is potentially a move away from its capital-light model, which could be a risk to long-term profit margins.

Am I worried?

On the other hand, driverless taxis could significantly lower Uber’s costs. And I still think the firm has a strong chance of becoming the world’s largest facilitator of AV trips by 2029.

So, as a shareholder, I’m not overly worried yet.

The stock’s down 26% since November, giving a forward earnings multiple of 22. Given the super app potential, I think Uber’s worth considering today around $74.

The post This S&P 500 giant is building a global super app appeared first on The Twelfth Magpie.

For long-term investors, this could be a major opportunity. If someone has cash sitting in their Stocks and Shares ISA right now, it could be time to consider putting some of it to work.

Big falls

At first glance, stocks haven’t taken too much of a hit from the Iran war and the subsequent spike in the oil price. At index level, the FTSE 100 and the S&P 500 indexes are only down around 5%.

If we dig deeper however, and take a look within the indexes, the story’s very different. At individual stock level, there are names that are down 10%, 20%, 30% or even more from their recent highs.

This is where I think the real opportunities are. Because there’s scope for big rebounds when market conditions improve.

Plenty of these shares look very oversold. By buying now, investors could see strong gains when geopolitical and economic uncertainty dies down.

An opportunity in the market

One stock I think looks very interesting right now is Uber (NYSE: UBER), the well-known rideshare and food delivery company that operates globally.

Listed in the US, it’s currently trading in the low $70s. That’s about 30% below its 52-week highs.

The bull case for Uber

In my view, this stock has all the right ingredients to be a great long-term investment. For a start, its name’s a verb – that’s a powerful competitive advantage.

Second, it has a near monopoly in many of the markets it operates in. Here in the UK, it has around 70% market share of the ride-hailing industry.

Next, it’s growing at a fast pace. Last year, revenue rose around 18% to $52bn.

Note that it has partnerships with a ton of self-driving taxi companies (eg Waymo, Zoox, Wayve). This is a source of growth for the future.

Additionally, it’s profitable and has a strong balance sheet. It’s also buying back a lot of its own stock.

Finally, the valuation is very reasonable today. At present, the forward-looking price-to-earnings (P/E) ratio is only about 21.

Significant long-term potential

Of course, it’s not perfect. Looking ahead, competition from self-driving car companies like Tesla and Waymo is a threat. Another risk is a severe consumer slowdown. This could lead to less spending on travel and transportation.

I should also point out that some people believe that agentic AI will disrupt this company. I’m not convinced it will but it’s a risk to consider.

Overall though, I see a lot of potential at current prices. If an investor has capital to deploy, I believe this stock’s worth a look.

But Uber’s not the only name that looks interesting to me right now.

The post The 2026 stock market sell-off could be a rare opportunity to build wealth in an ISA appeared first on The Twelfth Magpie.

One international stock that I believe is worth a look is Uber (NYSE: UBER), which is listed in the US. Here are three reasons I’m bullish on this name.

Top- and bottom-line growth

Thanks to its powerful brand and massive global user base (200m users worldwide), Uber has grown at an impressive rate recently. Over the last three years, its revenue has climbed from $31.9bn to $52bn (annualised growth of 18%).

This isn’t just a top-line growth story, however. Today, Uber is very profitable and generating a ton of cash flow.

Note that with this cash flow, the company is buying back a lot of shares. This should turbo-charge its earnings per share growth going forward.

A major player in the robotaxi space

Looking ahead, the growth runway here has plenty of room to run. One key growth driver could be robotaxis.

Earlier this week, Nvidia – which has a partnership with the rideshare company – announced that Uber will launch a global fleet of Nvidia-powered autonomous vehicles, starting in Los Angeles and San Francisco in the first half of 2027 and scaling across 28 cities globally by 2028. This will be supported by the growing roster of Nvidia’s automotive partners (which includes the likes of Nissan, Hyundai, and Mercedes-Benz).

This partnership is a big deal. It could help the company become the ‘operating system’ for the global robotaxi industry and beat competitors such as Waymo and Tesla.

It’s worth noting that Uber has robotaxi partnerships with many other companies. Earlier this month, it announced a strategic partnership with Amazon-owned robotaxi company Zoox.

Via this partnership, Zoox taxis will be available on the Uber app, starting in Las Vegas this summer. Other companies it has partnered with include Lucid, Waymo, and UK-based Wayve.

I’ll point out that we don’t know exactly how robotaxis will affect Uber’s financials. But with no human drivers, there’s potential for dramatically lower costs (and higher profits).

Attractive valuation

In terms of the valuation, it’s very reasonable today. After a significant pullback in the share price recently, the stock is now trading on a forward-looking price-to-earnings (P/E) ratio of 23, falling to 18 using next year’s earnings forecast.

These are not high multiples. Considering the long-term growth potential here, the stock looks cheap, in my view.

Worth a look near $75

Of course, while there are many reasons to be bullish here, there are also risks. Competition from the likes of Tesla and Waymo is one to think about.

A drop in consumer spending is another. This could come about if AI leads to mass job losses.

All things considered though, I see a lot of appeal in the stock at current levels (near $75). In my view, it’s worth considering for an ISA or SIPP.

The post UK investors should consider buying shares in Uber. Here’s why appeared first on The Twelfth Magpie.

Should I capitalise on the share price weakness and buy more stock for my portfolio? Let’s discuss.

Amazon has many ways to win

Amazon had a relatively strong run into its Q4 earnings. However, it then got hit after the company announced in its earnings that it plans to spend a whopping $200bn on AI and data centres this year.

That’s a huge amount of money. And it has clearly spooked a lot of investors.

Now obviously, this kind of capital outlay adds risk to the investment case because return on investment is unclear at this stage. However, I’m inclined to see the share price dip as a buying opportunity.

Ultimately, this company continues to have many different ways to win. Not only is it a global leader in cloud computing and e-commerce, but it’s also doing amazing things in digital advertising, chips, robotics, and low earth orbit satellites.

Note that looking beyond the $200bn capex shock, performance in Q4 was actually very strong. Sales were up 14% year on year with cloud revenues growing 24%.

Notably, revenue from its AI chips grew by a triple-digit percentage year on year. Annualised revenue here is now over $10bn.

Given this momentum, I’ll be looking to buy some more shares in the weeks ahead, assuming the share price stays around $200 to $210. Taking a long-term view, I think that move should pay off.

Uber still has tons of potential

Turning to Uber, it has fallen from around $100 to $75 recently (a decline of 25%). One reason for this is that companies like Tesla and Alphabet have been making a lot of self-driving taxi announcements.

Personally, I don’t see the share price weakness as justified. Because Uber has partnerships with a ton of different autonomous vehicle (AV) companies.

In the long run, I expect it to be the dominant platform for mobility. With so many different partnerships, it should be able to offer consumers the best service.

“We enter 2026 with a rapidly growing topline, significant cash flow, and a clear path to becoming the largest facilitator of AV trips in the world.”
Uber CEO Dara Khosrowshahi

Looking at Uber’s Q4 earnings, business performance is strong right now. For the period, revenue was up 20% to $14.4bn thanks to a 22% increase in the number of trips on its platform (3.8bn).

Net cash provided by operating activities was $2.9bn. Meanwhile, free cash flow was $2.8bn.

Of course, there’s no guarantee that this strong performance will continue. A drop in consumer spending could hurt Uber’s growth.

With the stock now trading on a forward-looking price-to-earnings (P/E) ratio of only 22, however, I see a lot of appeal. I’ll be looking to buy more shares in the weeks ahead.

The post Should I buy more stock of Amazon and Uber for my ISA after 10%+ falls appeared first on The Twelfth Magpie.

However, Uber was flying even higher until recently, with its share price nudging above $100. Now it’s back down at $85, I think it’s worth considering as a buying opportunity. Here’s why.

Still growing strongly

A global leader in rideshare and delivery, Uber likely needs no introduction. It essentially facilitates the movement of people, food, parcels, and freight from point A to B.

Its strong brand powers a potent network effect (more riders attract more drivers, and vice versa).

Of course, Uber is hardly a new kid on the block nowadays, so investors may be wondering just how much growth is left in the tank here.

Well, the firm ended Q3 with 189m monthly active users on its platform, which was 17% more than the year before. And it carried out a mind-boggling 3.5bn trips globally over that 13-week period (up 4%).

Meanwhile, revenue growth clocked in at 20% ($13.5bn), while adjusted EBITDA grew 33% to $2.3bn. Free cash flow was a healthy $2.2bn.

For Q4, which Uber will report in early February, management anticipates gross bookings growth of 17%-21%, as well as adjusted EBITDA growth of 31%-36%.

Low penetration rates

These numbers tell us that Uber’s growth engine is humming along nicely. And management sees that continuing for the next couple of years (at least), with annualised bookings growth in the mid-to-high teens percentage range, along with 35%-40% adjusted EBITDA growth.

Another thing worth noting is that the number of adults using Uber in its top 10 countries is around 15%, according to management. In the other 60+ countries, the penetration rate is still often much lower. 

In other words, Uber still has a long runway of potential growth left across most of its markets, including mature ones. I can easily imagine a future where it captures 20%, say, or even higher.

We see profitability growing faster than our top line for years to come.
Uber CFO Prashanth Mahendra-Rajah

Robotaxi risk or opportunity?

The main long-term threat hanging over Uber is robotaxis from Tesla and Google’s Waymo. This could result in consumers booking autonomous vehicle (AV) rides directly on these firms’ apps rather than Uber’s. This risk shouldn’t be ignored.

However, Tesla and Waymo aren’t the only AV firms around. Far from it. The UK’s Wayve has a similar AI-based approach to Tesla, while WeRide has already launched robotaxis with Uber in Abu Dhabi, Riyadh, and Dubai.

By the end of 2026, there will be at least 10 cities where robotaxis can be booked on Uber, and it’s working with 20+ AV partners. These include China’s Baidu and Pony.ai, as well as Waymo in three US cities.

My view is that most robotaxi rides will eventually be booked on Uber, where massive customer demand already exists.

Not overvalued

I already have a chunky Uber position that I built up last year. So I’m not looking to buy more shares (at least not yet).

But at $85, the stock’s forward price-to-earnings multiple for 2027 is around 19. At this price, I see plenty of value, and reckon it deserves a place on investors’ radar.

The post Down 15%, this S&P 500 stock looks like a buying opportunity to me appeared first on The Twelfth Magpie.

As for the biggest no-brainer, I reckon it’s rideshare and food delivery champion Uber (NYSE: UBER). Here’s why.

The compelling investment case for Uber

One reason I categorise Uber thus is that the company’s name’s a verb. That’s a powerful competitive advantage.

Because it means the company’s always at the forefront of consumers’ minds. When I arrive at an international airport and need a ride to my accommodation, for example, I always look to ‘Uber’ it.

Another is that the company has a near-monopoly in many major markets. In London, for instance, there are no other rideshare companies that come close to Uber in terms of market share (I can’t remember the last time I used Bolt!).

Another key part to the investment thesis here is that Uber’s very scalable. It’s continually expanding into new cities, getting bigger and bigger all the time.

It’s also continually offering new services. Some examples here include Uber Courier in London, Uber Shuttle (local shuttle services) in several US cities, and Uber Caregiver (this lets caregivers book rides for care recipients).

Of course, it’s also partnering with a ton of autonomous driving companies to offer self-driving taxis. Recently, I used the Uber app to grab a ride in one of Google’s self-driving Waymo taxis in the US.

Finally, its financials look great. Revenue’s growing by around 15%-20% a year while profits are expanding at a healthy rate too.

The company’s also buying back a ton of its own shares (it announced a $20bn buyback in August). This is boosting earnings per share (EPS).

Attractive valuation

Now, with so much going for it, you’d expect Uber to have a sky-high valuation. But right now, it doesn’t. For the current year, analysts expect the company to generate EPS of $5.24. That puts the stock on a price-to-earnings (P/E) ratio of just 17.4.

At that earnings multiple, I see a lot of value. I’ll point out however, that earnings this year have been boosted by a $4.9bn tax valuation release. So earnings next year are likely to be lower.

Worth a look below $100

Of course, there are risks to consider with this stock. One is competition from Tesla’s robotaxis. Personally, I don’t see this as a major threat given Uber’s self-driving partnerships, but some investors do.

Another is regulatory interference. This could potentially lead to fines that hit profits.

It’s also worth pointing out that recently the stock has struggled to break clear of the $100 mark. Right now, this area’s acting as ‘resistance’ for the share price.

I think it’s only a matter of time until it hurdles this barrier (and keeps rising). So I think it’s worth considering today.

It’s not the only stock I like at the moment though.

The post The biggest ‘no-brainer’ stock in my ISA and SIPP as we approach 2026 is… appeared first on The Twelfth Magpie.

Here, I’m going to highlight two high-quality S&P 500 companies I’ve been building positions in recently and plan to hold for the long term. These stocks have been excellent investments lately and I’m backing them to boost my retirement portfolio significantly over the next decade.

A global transportation powerhouse

First up, we have Uber (NYSE: UBER). It’s the world’s largest rideshare and food delivery company.

I see a lot of growth potential here as this is a very scalable business. Over the next decade, I expect Uber to get much bigger as it launches in new cities and offers new services (today it offers all kinds of services including courier services and plane/train/boat bookings).

Note that year-on-year revenue growth for the third quarter of 2025 was 20%. So, the company is growing at a rapid clip today.

One thing that excites me here is the potential for self-driving taxis. Currently, Uber has partnerships with over 10 autonomous driving companies and last month, it launched a partnership with Nvidia to accelerate the development of autonomous taxis.

Now, some people believe that Tesla, and its self-driving tech, is a risk here. I’m not convinced it is though as I reckon there’s room for lots of companies in this space.

I think a bigger threat is AI-related job losses and the impact on consumer spending. If a ton of people lose their jobs in the years ahead, the travel industry is likely to be impacted so this is an issue I’ll be monitoring.

Right now, however, the outlook is attractive in my view. Trading on a forward-looking price-to-earnings (P/E) of around 25, I think this stock is worth a closer look.

A top player in cybersecurity

The other stock I want to highlight is CrowdStrike (NASDAQ: CRWD). It’s generally regarded as the industry leader in the cybersecurity space.

Over the next decade, I expect the cybersecurity industry to grow dramatically. Today, no business can afford to take this area of technology lightly – the risks are simply too high (like going out of business).

I see CrowdStrike as well positioned to benefit from the industry growth. It offers a comprehensive, cloud-native platform known as Falcon, which is designed to provide powerful protection to businesses.

It’s worth noting that like Uber, CrowdStrike just launched a partnership with Nvidia. Together the companies will be working to develop always-on AI agents for cybersecurity that can protect data centres.

This stock has always been expensive (its P/E ratio is about 150 today). But that hasn’t stopped it delivering brilliant returns over the long term.

Over the last year, it’s up about 80%. Over the last five, it’s up about 285% (with lots of volatility along the way).

The thing is, the company is still pretty small today (relative to other US tech companies). Currently, its market cap is only around $140bn.

I think it can get much bigger and is worth considering as a long-term investment. Competition from rivals and operational setbacks are risks, but over the next five-to-10 years, I think this stock will do well.

The post I’m backing these exceptional S&P 500 stocks to significantly boost my retirement portfolio over the next 10 years appeared first on The Twelfth Magpie.

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.

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