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SERV Stock Slips 9% in a Month: Should Investors Buy the Dip or Wait?
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Key Takeaways
SERV has declined 9.1% over the past month, underperforming industry peers and broader tech indices.
Rising costs, tariffs and widening 2025 loss estimates are weighing on SERV's near-term outlook.
SERV is expanding its Gen 3 robot fleet and expects recurring software revenues to grow starting Q2 2025.
Shares of Serve Robotics Inc. (SERV - Free Report) have declined 9.1% over the past month, against the Zacks Computers - IT Services industry’s rise of 1.1%. The stock has lagged the Zacks Computer and Technology sector’s and the S&P 500’s growth of 6.6% and 4.4%, respectively.
The stock has underperformed industry peers, including C3.ai, Inc. (AI - Free Report) down 1.5%, Evolv Technologies Holdings, Inc. (EVLV - Free Report) up 8.6%, and Cognizant Technology Solutions Corporation (CTSH - Free Report) , up 0.6% in the same time frame.
The recent decline in Serve Robotics' stock can be largely attributed to profit-booking, following its earlier surge. Additionally, the stock has come under pressure due to ongoing supply chain challenges, rising tariff-related costs, and growing investor concerns surrounding the company’s elevated cost structure and uncertain path to profitability.
SERV's One-Month Price Performance
Image Source: Zacks Investment Research
While the near-term headwinds are undeniable, long-term investors may find an opportunity brewing beneath the surface. Given the pullback in Serve Robotics shares currently, investors might be tempted to snap up the stock. But is this the right time to buy SERV? Let’s find out.
What’s Pressuring Serve Robotics Stock?
Mounting Cost Pressures Undermine Profitability: Serve Robotics is grappling with rising operating expenses as it pushes forward with its fleet expansion and market rollout strategy. During the first quarter of 2025, GAAP operating costs rose to $13.5 million from $12.9 million in the fourth quarter of 2024 and $8.3 million in the year-ago period. The upside was driven by significant investments in R&D, infrastructure and new market launches. Non-GAAP operating expenses nearly doubled year over year to $9.5 million.
During the quarter, total cost of revenues climbed by approximately $1 million, primarily due to startup expenses linked to fleet scale-up and new market launches. Although software services reported strong margins, the growing share of early-stage operations and fleet revenues diluted the overall mix. These dynamics contributed to an adjusted EBITDA loss of $7.1 million in the first quarter. Although SERV remains confident in long-term operating leverage, near-term profitability is likely being weighed down by the capital-intensive nature of its growth trajectory.
Supply Chain Strains and Tariff Tensions: Like many tech manufacturers, Serve Robotics is feeling the squeeze from persistent supply-chain disruptions and rising tariffs. Although management emphasized that Gen 3 robot BOM costs helped offset direct tariff impact, the company has acknowledged lingering uncertainty regarding global component availability. According to recent disclosures, Serve Robotics may be forced to incur higher procurement costs and accept non-cancelable purchase commitments, exposing it to inventory risk if forecasts prove inaccurate. Such dynamics could pressure cash runway assumptions and delay manufacturing timelines.
Serve Robotics' 2025 loss per share estimates have widened from 83 cents to 93 cents over the past 60 days. This downward trend reflects weakening analyst confidence in the stock’s near-term prospects.
Image Source: Zacks Investment Research
The company is likely to report lackluster earnings, with projections indicating a 38.8% slump in 2025. Conversely, industry players like C3.ai, Evolv Technologies and Cognizant are likely to witness growth of 9.8%, 32.4% and 6.7% year over year, respectively, in 2025 earnings.
Valuation Insights for SERV Stock
Serve Robotics stock is currently trading at a premium. SERV is currently trading at a forward 12-month price-to-sales (P/S) multiple of 26.63X, well above the industry average of 19.46X. Then again, other industry players, such as C3.ai, Evolv Technologies and Cognizant, have P/S ratios of 7.15X, 6.93X and 1.86X, respectively.
Image Source: Zacks Investment Research
Can SERV Overcome the Headwinds?
Serve Robotics may be facing near-term challenges, but investors have plenty of reasons to stay confident in the stock’s long-term potential. The company is executing a focused strategy centered around autonomous delivery at scale, anchored by next-gen robotics, strong merchant partnerships, and disciplined market expansion.
At the core of the transformation is the rapid deployment of the company’s third-generation autonomous delivery robots. In the first quarter of 2025, the company added 250 Gen 3 robots to its fleet, bringing the total to over 300 and expanding into key markets like Miami and Dallas ahead of schedule. These deployments drove a more than 75% increase in delivery volume quarter over quarter, setting the stage for continued expansion in the second quarter of 2025 and beyond.
Serve Robotics is actively advancing the monetization of its proprietary software and data platform. The platform powers the creation and operation of autonomous robot fleets and leverages vehicle-generated data to train AI models, opening up new business opportunities. Serve has secured agreements with key customers, including a major European automaker, a middle-mile autonomous trucking firm, and specialized industrial robotics companies. Beginning in the second quarter of 2025, the company expects to generate recurring software platform revenues and anticipates growth over time. The initiative is designed to diversify revenue streams and reduce reliance on any single partner or vertical.
Operational execution remains central to Serve Robotics' progress. With $198 million in cash, the company has opted to self-fund its 2,000-robot rollout, avoiding high-cost financing and preserving financial flexibility. The management guides for $60–$80 million in annualized revenue once the fleet reaches full utilization, expected in 2026.
Analysts Maintain Bullish Outlook on Serve Robotics Stock
Analysts remain optimistic on Serve Robotics, projecting robust upside potential as the company expands its autonomous delivery footprint. Based on short-term projections from five analysts, the average price target for SERV stands at $16.40, representing an impressive 49.8% upside from its last closing price of $10.95. Target estimates range from a low of $10.00 (implying a downside risk of 8.7%) to a high of $23.00, suggesting a substantial upside potential of 110.1%.
Broker sentiment toward SERV remains firmly positive. The company holds an average brokerage recommendation (ABR) of 1.00 on a scale of 1 (Strong Buy) to 5 (Strong Sell), indicating unanimous support. All five covering firms have issued Strong Buy recommendations, reflecting full alignment on the stock’s favorable outlook.
SERV Price Target
Image Source: Zacks Investment Research
The consistently strong analyst support, paired with price targets heavily skewed to the upside, underscores growing confidence in Serve Robotics’ long-term growth trajectory
SERV Stock Investment Strategy
Serve Robotics offers a compelling long-term growth narrative driven by accelerated fleet deployment, deepening market penetration, and strategic software monetization. However, the company’s elevated cost base, persistent supply chain, and tariff headwinds present notable risks.
While analysts remain constructive on SERV’s multi-year prospects, the stock’s premium valuation, widening losses, and downward earnings revisions suggest that expectations may be running ahead of fundamentals.
Given these dynamics, investors are advised to maintain their positions in this Zacks Rank #3 (Hold) stock. However, prospective investors are advised to wait for clearer signs of margin stabilization and revenue acceleration before stepping in.
Image: Shutterstock
SERV Stock Slips 9% in a Month: Should Investors Buy the Dip or Wait?
Key Takeaways
Shares of Serve Robotics Inc. (SERV - Free Report) have declined 9.1% over the past month, against the Zacks Computers - IT Services industry’s rise of 1.1%. The stock has lagged the Zacks Computer and Technology sector’s and the S&P 500’s growth of 6.6% and 4.4%, respectively.
The stock has underperformed industry peers, including C3.ai, Inc. (AI - Free Report) down 1.5%, Evolv Technologies Holdings, Inc. (EVLV - Free Report) up 8.6%, and Cognizant Technology Solutions Corporation (CTSH - Free Report) , up 0.6% in the same time frame.
The recent decline in Serve Robotics' stock can be largely attributed to profit-booking, following its earlier surge. Additionally, the stock has come under pressure due to ongoing supply chain challenges, rising tariff-related costs, and growing investor concerns surrounding the company’s elevated cost structure and uncertain path to profitability.
SERV's One-Month Price Performance
Image Source: Zacks Investment Research
While the near-term headwinds are undeniable, long-term investors may find an opportunity brewing beneath the surface. Given the pullback in Serve Robotics shares currently, investors might be tempted to snap up the stock. But is this the right time to buy SERV? Let’s find out.
What’s Pressuring Serve Robotics Stock?
Mounting Cost Pressures Undermine Profitability: Serve Robotics is grappling with rising operating expenses as it pushes forward with its fleet expansion and market rollout strategy. During the first quarter of 2025, GAAP operating costs rose to $13.5 million from $12.9 million in the fourth quarter of 2024 and $8.3 million in the year-ago period. The upside was driven by significant investments in R&D, infrastructure and new market launches. Non-GAAP operating expenses nearly doubled year over year to $9.5 million.
During the quarter, total cost of revenues climbed by approximately $1 million, primarily due to startup expenses linked to fleet scale-up and new market launches. Although software services reported strong margins, the growing share of early-stage operations and fleet revenues diluted the overall mix. These dynamics contributed to an adjusted EBITDA loss of $7.1 million in the first quarter. Although SERV remains confident in long-term operating leverage, near-term profitability is likely being weighed down by the capital-intensive nature of its growth trajectory.
Supply Chain Strains and Tariff Tensions: Like many tech manufacturers, Serve Robotics is feeling the squeeze from persistent supply-chain disruptions and rising tariffs. Although management emphasized that Gen 3 robot BOM costs helped offset direct tariff impact, the company has acknowledged lingering uncertainty regarding global component availability. According to recent disclosures, Serve Robotics may be forced to incur higher procurement costs and accept non-cancelable purchase commitments, exposing it to inventory risk if forecasts prove inaccurate. Such dynamics could pressure cash runway assumptions and delay manufacturing timelines.
Downward Earnings Estimate Revision Ails SERV Stock’s Prospects
Serve Robotics' 2025 loss per share estimates have widened from 83 cents to 93 cents over the past 60 days. This downward trend reflects weakening analyst confidence in the stock’s near-term prospects.
Image Source: Zacks Investment Research
The company is likely to report lackluster earnings, with projections indicating a 38.8% slump in 2025. Conversely, industry players like C3.ai, Evolv Technologies and Cognizant are likely to witness growth of 9.8%, 32.4% and 6.7% year over year, respectively, in 2025 earnings.
Valuation Insights for SERV Stock
Serve Robotics stock is currently trading at a premium. SERV is currently trading at a forward 12-month price-to-sales (P/S) multiple of 26.63X, well above the industry average of 19.46X. Then again, other industry players, such as C3.ai, Evolv Technologies and Cognizant, have P/S ratios of 7.15X, 6.93X and 1.86X, respectively.
Image Source: Zacks Investment Research
Can SERV Overcome the Headwinds?
Serve Robotics may be facing near-term challenges, but investors have plenty of reasons to stay confident in the stock’s long-term potential. The company is executing a focused strategy centered around autonomous delivery at scale, anchored by next-gen robotics, strong merchant partnerships, and disciplined market expansion.
At the core of the transformation is the rapid deployment of the company’s third-generation autonomous delivery robots. In the first quarter of 2025, the company added 250 Gen 3 robots to its fleet, bringing the total to over 300 and expanding into key markets like Miami and Dallas ahead of schedule. These deployments drove a more than 75% increase in delivery volume quarter over quarter, setting the stage for continued expansion in the second quarter of 2025 and beyond.
Serve Robotics is actively advancing the monetization of its proprietary software and data platform. The platform powers the creation and operation of autonomous robot fleets and leverages vehicle-generated data to train AI models, opening up new business opportunities. Serve has secured agreements with key customers, including a major European automaker, a middle-mile autonomous trucking firm, and specialized industrial robotics companies. Beginning in the second quarter of 2025, the company expects to generate recurring software platform revenues and anticipates growth over time. The initiative is designed to diversify revenue streams and reduce reliance on any single partner or vertical.
Operational execution remains central to Serve Robotics' progress. With $198 million in cash, the company has opted to self-fund its 2,000-robot rollout, avoiding high-cost financing and preserving financial flexibility. The management guides for $60–$80 million in annualized revenue once the fleet reaches full utilization, expected in 2026.
Analysts Maintain Bullish Outlook on Serve Robotics Stock
Analysts remain optimistic on Serve Robotics, projecting robust upside potential as the company expands its autonomous delivery footprint. Based on short-term projections from five analysts, the average price target for SERV stands at $16.40, representing an impressive 49.8% upside from its last closing price of $10.95. Target estimates range from a low of $10.00 (implying a downside risk of 8.7%) to a high of $23.00, suggesting a substantial upside potential of 110.1%.
Broker sentiment toward SERV remains firmly positive. The company holds an average brokerage recommendation (ABR) of 1.00 on a scale of 1 (Strong Buy) to 5 (Strong Sell), indicating unanimous support. All five covering firms have issued Strong Buy recommendations, reflecting full alignment on the stock’s favorable outlook.
SERV Price Target
Image Source: Zacks Investment Research
The consistently strong analyst support, paired with price targets heavily skewed to the upside, underscores growing confidence in Serve Robotics’ long-term growth trajectory
SERV Stock Investment Strategy
Serve Robotics offers a compelling long-term growth narrative driven by accelerated fleet deployment, deepening market penetration, and strategic software monetization. However, the company’s elevated cost base, persistent supply chain, and tariff headwinds present notable risks.
While analysts remain constructive on SERV’s multi-year prospects, the stock’s premium valuation, widening losses, and downward earnings revisions suggest that expectations may be running ahead of fundamentals.
Given these dynamics, investors are advised to maintain their positions in this Zacks Rank #3 (Hold) stock. However, prospective investors are advised to wait for clearer signs of margin stabilization and revenue acceleration before stepping in.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.