Uber's Risks From Self Driving to Take Center Stage of Earnings

Uber Technologies Inc. is making a renewed push into autonomous vehicles, committing $250 million to Canadian startup Waabi as part of a $1 billion funding round and launching AV Labs to leverage its trip data for robotaxi development. This move highlights Uber's effort to evolve into an autonomy and data platform, potentially redefining its role in the mobility industry.

The AV Labs initiative is designed to create a "data flywheel," using real-world driving scenarios to improve AI models and enhance safety systems. The company's Vice President of Engineering and Science, Danny Guo, emphasized the importance of learning from messy, real-world situations to advance self-driving technology.

Analysts are weighing the long-term implications of Uber's autonomous vehicle strategy. Stifel analyst Mark Kelley lowered the price target for Uber shares from $122 to $105, citing uncertainty around the impact of robotaxis on the company's business model.

Why Is the AV Push Important for Uber?

Uber's AV Labs and partnership with Waabi aim to position the company as an aggregator of robotaxi supply, potentially deepening its relationships with carmakers and self-driving technology providers. The initiative represents a shift in Uber's investment narrative, emphasizing autonomy and data monetization alongside its core ride-hailing and delivery operations.

However, investors must also consider the rising legal, safety, and regulatory risks associated with the self-driving industry. Uber faces challenges related to gig worker classification, particularly in Europe and New York City, which could affect its operational costs and profitability.

How Are Analysts Responding to the AV Strategy?

Analysts from JPMorgan and Wedbush have expressed caution regarding the potential impact of autonomous vehicles on Uber's earnings. JPMorgan analyst Douglas Anmuth noted that AV headline risk continues to dominate discussions around the company, leading to market volatility.

Wedbush analyst Scott Devitt estimated that about 40% of Uber's mobility bookings are most exposed to AV risk. He warned that the market might be underestimating the long-term impact of autonomous vehicle disruption on discounted cash flow valuations.

Bernstein analysts, however, defended Uber, arguing that much of the AV risk is already priced into the stock. Nikhil Devnani of Bernstein suggested that the stock is trading at a premium to its mobility peers, and that international and delivery growth could provide a buffer against disruption.

What Are the Broader Implications for the Market?

Uber's move into AV technology comes as competitors like Alphabet's Waymo and Tesla's autonomous initiatives gain momentum. Waymo recently raised $16 billion in a funding round, valuing the company at $126 billion. This development highlights the competitive landscape Uber faces as it invests in its own self-driving capabilities.

Investor sentiment has remained cautious, with Uber's stock down about 22% since hitting a record high in October 2025. The market will be closely watching the company's upcoming Q4 earnings report for insights into the impact of AV Labs, demand trends, and regulatory developments.

Uber's recent reentry into the Chinese market in Macau, where it is recruiting drivers and offering a premium limo service, also signals its broader strategy to expand its global footprint.

The company's stock faces short-term pressure as AV Labs highlights both opportunity and risk. While autonomous vehicles represent a long-term growth path, regulatory challenges and competition create uncertainty. Investor attention now turns to earnings and operational guidance to determine the company's next moves.