How will Waymo’s autonomous vehicle permit in California impact Alphabet’s stock going forward?

[Grace A]

[Ignatius Bose]

California’s Public Utilities Commission has permitted Alphabet (NASDAQ:GOOGL) subsidiary Waymo’s self-driving cars to carry passengers in California as part of its Autonomous Vehicle Passenger Service pilot program. Although Waymo is the fourth autonomous vehicle firm to have received the permit along with AutoX Technologies Inc., Pony.ai Inc. and Zoox Inc., the licence is different from the one allowing companies to test their self-driving cars and is valid for three years. Though the permit comes with a clause that Waymo would not charge riders and a safety driver must be behind the wheel, the licence could open the door for the self-driving car company to offer autonomous taxi services like the one it operates in the Phoenix, Arizona area.

Waymo has already partnered with Renault and Nissan in a bid to expand its autonomous technology worldwide, with plans to begin services in France and Japan, even as the company’s autonomous cars completed more than 1.3 million miles on public roads in California in 2018, more than all its competitors combined.

Google is said to have pumped in billions of dollars into its self-driving car research over the last 10 years and is now expected to reap the benefits. While the company is currently trading at 25X earnings, Waymo is expected to transform the company not only from the revenues it is about to generate from its self-driven cars but from it's Light Detection and Ranging (LiDAR) technology that the company plans to sell worldwide.

Shares of Alphabet are up about 6.4% year to date, settling at $1112.60 on Tuesday, 2nd July and while the tech giant’s core business is likely to lend support to the company’s share prices in the near-to-medium term, analysts predict Waymo and the LiDAR technology to drive the company’s stock beyond $2000 in the next couple of years.