D.A. Davidson analysts, led by five-star-rated Gil Luria, say that Alphabet’s (GOOGL) self-driving car unit, Waymo, could be worth more than $200 billion if it were separated into its own company. In a note to clients, the firm compared Waymo’s potential to Tesla’s (TSLA) robotaxi business and suggested that breaking up tech giant Alphabet could unlock shareholder value from its strongest divisions. Indeed, the analysts argued that this would let investors invest directly in the divisions they are most interested in, which include those that compete with major players such as Netflix (NFLX), Amazon Web Services (AMZN), and OpenAI.
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Interestingly, when it comes to Waymo, D.A. Davidson estimates its value at about $16 per Alphabet share by using Tesla’s $1 trillion market value as a guide. It noted that Tesla’s valuation is heavily influenced by its robotaxi plans, even though the business currently brings in very little revenue. Waymo, on the other hand, could generate over $700 million in 2026 with a fleet of 3,500 vehicles. The note also pointed out that Waymo is already running more than 1,500 cars in four U.S. cities, which shows that its technology is further along than many competitors.
In addition, while D.A. Davidson admitted that Tesla’s approach to autonomous driving is appealing, it said that there is room for both companies to succeed. As a result, the firm kept its Neutral rating on Alphabet but said that a breakup could make it its top large-cap pick. This is because investors are becoming frustrated with Alphabet’s weaker performance in search, cloud, and advertising compared to competitors. Therefore, its current valuation could push the board to consider a split.
Is Google Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on GOOGL stock based on 26 Buys and nine Holds assigned in the past three months. Furthermore, the average GOOGL price target of $214.41 per share implies 9.8% upside potential.
