As reported by the New York Times, Uber Technologies ((UBER Quick QuoteUBER - Free Report) ) is in early talks to acquire the US subsidiary of Pony.ai ((PONY Quick QuotePONY - Free Report) ), a Chinese-American autonomous vehicle company. This move comes as Alphabet’s ((GOOGL Quick QuoteGOOGL - Free Report) ) Waymo and Tesla ((TSLA Quick QuoteTSLA - Free Report) ) ramp up competition in the robotaxi space, pressuring Uber to strengthen its position in autonomous transportation.

The autonomous vehicle race is accelerating as the technology becomes increasingly viable. Uber already partners with Waymo to operate autonomous taxis in several cities, while Tesla recently launched a beta version of its own robotaxi service. If Uber moves forward with the Pony.ai acquisition, it could gain a deeper foothold in the self-driving space, complementing its existing distribution dominance with greater control over core AV technology.

Uber Technologies remains my personal favorite horse in this race and the market seems to agree, as its stock has been far outperforming its competitors and the broad market year-to-date.

Image Source: Zacks Investment Research

Uber Technologies’ AV Business Advantage

Uber’s approach to autonomous vehicles seems to offer a structural edge over competitors like Waymo and Tesla. Unlike those companies, which are heavily invested in building and owning both the vehicles and the technology, Uber operates an asset-light platform model. It doesn’t need to own the cars, it owns the distribution layer through its globally scaled app and now, potentially, a stake in proprietary AV technology via a Pony.ai acquisition.

This combination, controlling both the customer interface and the core routing technology, without tying up capital in vehicle manufacturing, gives Uber a potential path to superior margins. As autonomous vehicles scale, Uber can integrate them into its platform with minimal incremental cost. It’s a hybrid strategy that could prove far more efficient and profitable than vertically integrated models, especially in the early innings of widespread autonomous vehicle adoption.

UBER Shares Rise on Growing Profits and Reasonable Valuation

Even without factoring in the enormous upside potential from autonomous vehicles, Uber Technologies already offers a highly compelling investment case based on its core fundamentals.

After years of operating in the red, Uber has decisively turned the corner. The company is now not only profitable, but in fact gushing substantial cash, marking a major inflection point in its financial trajectory. Shares currently trade at a reasonable 31x forward earnings, which is attractive given Uber’s scale, improving margins, and dominant market position.

Analysts expect Uber’s earnings to grow at an impressive 27.2% annually over the next three to five years, driven by strong execution across all business segments. Uber’s leadership in ride-hailing is well known, but it also dominates in adjacent verticals like food delivery (Uber Eats) and has built a growing presence in freight and logistics, giving it a diversified revenue base and multiple long-term growth levers.

Which Stock Should Investors Buy for AV Exposure?

For investors looking to gain exposure to the autonomous vehicle revolution, I believe Uber Technologies stands out as the most compelling opportunity. Its asset-light platform, growing profitability, and potential acquisition of Pony.ai give it a unique position in the space, combining massive scale with increasing control over AV technology, all while maintaining capital efficiency.

Alphabet, through its ownership of Waymo, is also worth considering. Waymo remains a clear technology leader in autonomous driving, with active commercial operations in several US cities. However, Waymo represents only a small fraction of Alphabet’s sprawling business, making it difficult for investors to gain targeted AV exposure through GOOGL alone.

Tesla, meanwhile, continues to push toward autonomy with its Full Self-Driving (FSD) software, but progress has been slower than expected. While it’s never wise to underestimate Elon Musk, Tesla’s AV development remains behind Waymo and Uber in terms of real-world deployment.

Ultimately, Uber is best positioned to capitalize on the AV boom, offering investors a direct play on self-driving technology layered atop an already profitable and dominant global mobility platform.