In a world where Google is no longer just Google, Alphabet Inc. (NASDAQ: GOOGL) has many current and future sources of revenues beyond search and advertising. The move toward self-driving cars is just one such source, but the opportunity looks massive.

A report from Merrill Lynch on Monday comes with a reiterated Buy rating and with the same $1,390 price objective. What stands out here is the focus on Waymo, and Merrill Lynch sees this as potentially being a $50 billion or more revenue opportunity in 10 years.

Merrill Lynch may not be alone in thinking that self-driving vehicles could be a transformative technology. It’s also not alone in recognizing that Alphabet has a strong position in that transformative technology. With Alphabet’s artificial intelligence and machine learning expertise, the firm thinks that Waymo alone could have a potential valuation of $75 billion.

Monday’s report doesn’t skip over some of the obvious problems. It notes that industry veterans such as General Motors, BMW and Tesla will lead the way in self-driving cars, but new entrants like Waymo, Uber and Lyft also have a role. Lowering the cost per mile and improving safety remain key issues to be resolved, as are finding parking and storage solutions.

Outside of used auto sales, there is $1.8 trillion per year spent on new autos, gasoline, insurance and parking in the United States alone. The report even addresses the social benefits that emerging technologies can assist with, with key issues being over 35,000 fatalities per year and traffic congestion costing U.S. drivers 42 hours per year.

The $50 billion sum may seem excessive, but the Merrill Lynch team is using the equivalent of a 1.4% share of the 3.2 trillion miles driven in the United States, with a total that could expand with autonomous driving. Perhaps the largest number to consider in the report is a potential of 500,000 or more vehicles by Waymo in 2029. The report said:

Assumptions on the rate of the Waymo fleet ramp lie at the core of our model. At this point, we know the Phoenix Early Rider Service is underway, beginning with ~600+ Fiat Chrysler Automobiles (FCA) hybrid minivans delivered in 2016-2017. Alphabet subsequently announced plans to acquire up to 20k Jaguar Land Rovers for deployment in 2020 in 3/18 (see Waymo business model takes a step forward), followed with an agreement with FCA announced in 5/18 to buy up to 62k hybrid minivans. On this premise, we assume over 80,000 vehicles deployed by 2023, though acknowledge the company has not yet specifically communicated a fleet deployment strategy.

It is always important to put the revenues and additional market value in perspective with present day valuations. Alphabet has an $821 billion market cap today. The company generated revenues of $110.85 billion in 2017, and Thomson Reuters sees revenues rising to more than $137 billion in 2018 and over $163 billion in 2019.

Alphabet shares were last seen trading up 1% at $1,184.00 on Monday, in a 52-week range of $924.51 to $1,291.44. The consensus analyst target price at Thomson Reuters was $1,385.10.

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