Key Points:

• Waymo logged 100,000 trips in a week, showing strong progress in self-driving technology.
• Tesla and Chinese companies lead in data collection, but Waymo’s tech-focused approach is competitive.
• Successful commercialization of Waymo could significantly boost Alphabet’s market value.
• Also: Investors believe they’ve found ‘The Next Nvidia’, unlock the stock picks for free by clicking here now. 

Douglas and Lee discuss Alphabet’s (NASDAQ: GOOG) involvement in the self-driving car industry through its subsidiary, Waymo. They highlight Waymo’s recent milestone of achieving 100,000 trips in a week, which they find impressive for a still-developing service. The conversation compares Waymo’s approach to Tesla’s (NASDAQ: TSLA), noting Tesla’s extensive data collection through its vehicles, which gives it an edge in mapping and AI capabilities. They also mention the competition from Chinese companies that are similarly collecting vast amounts of data. While they acknowledge that self-driving technology is still in its early stages, they believe Waymo is close to making significant breakthroughs. They agree that if Waymo becomes a commercial product, it could significantly boost Alphabet’s market cap. They also consider the potential for Alphabet and Tesla to collaborate but recognize that Musk might prefer to maintain Tesla’s dominance in the self-driving space. They plan to revisit the topic if there are major developments, such as the certification of a fully autonomous vehicle.

Transcript:

So our friends at Alphabet, known to most people as Google, happen to be in the self-driving car business.

They are.

Don’t know why they’re in it, but it seems like there are 100 cars now driving in this business.

So there’s news about that. What’s going on with what they’re known as Waymo?

Well, Waymo is probably Waymo better than most of the other self-driving cars.

But I read the other day that they had in a week 100,000 Waymo trips.

And I was like, that’s a lot.

That’s an incredible amount for what is still basically a reasonably untested, you know, driving service.

And some of the ones we’ve read about and heard about for the cars, you know, went off the road or, you know, ran into something.

I think that’s an incredible statistic for Alphabet and for Google.

And I think that’s something that really bears keeping a very close eye on because are they going to dominate this?

It’s interesting how this business works.

And by the way, I think that there’s a race now between China and the United States in terms of self-driving business.

The first one is that, and this is one of the reasons Tesla has an edge in some areas.

A lot of Teslas have eight cameras on, video cameras, and they aren’t just there for safety. They also collect data.

Right.

The artificial intelligence applications that Tesla has, they’ve really mapped visually pretty much every road in the United States 500 times over.

So that’s helpful when you do this.

Waymo is really a different animal.

It hasn’t, you don’t see Waymo cars all over the place because you can’t buy one.

So they really have to rely on technology that is within the automobile.

In other words, they haven’t mapped Akron, Ohio, so they don’t have that reference point.

Neither does Cruise, the GM product.

The Chinese products are a lot more like Tesla in that companies like Baidu and a number of tech companies already have collected that data.

The Chinese car companies are collecting the data.

So to me, that’s being ahead of just having technology that shows things where you are instead of actually working on mapping that already exists.

If you look at Tesla right now, Tesla’s price to me is 90% self-driving.

The EV business is not good enough so that Tesla’s market cap should be 10x GM or Ford.

What are you looking at? You’re basically looking at a self-driving car.

And I think that Alphabet’s looking at this and saying, you know, Alphabet’s got a lot of problems, including worrying about whether it gets broken up.

And having something that’s a true self-driving vehicle is going to be worth hundreds of billions of dollars.

Oh, absolutely. And it surely is the future.

Now, remember though, for years, and they were doing this through regular applications, you know, for Google Maps and Street View, they did map a lot of the roads in the country.

Okay, so that is an excellent point that I missed out on somehow in my calculations.

But yeah, they do have a lot of that data as well.

And like you said, I think Tesla has perhaps more advanced because you can look at Street View now.

Like the home I’m in right now, when we went to look at it on Street View, it was just a lot.

So this was obviously done, you know, five, six, seven years ago when the Google vans used to go through your neighborhood.

But still, they do have a lot of that data.

Well, the next wave of car technology is clearly self-driving.

And, you know, EVs aren’t perfect, perfect.

Or flying cars.

And some of the things that are drawbacks, those are iterations.

The worry about self-driving cars, as you said, is occasionally there are accidents.

And even if you drive a Tesla, which I’ve been a passenger in, when it’s on full self-driving mode, the owner’s manual says you’re supposed to keep your hands, you know, sort of very close to the steering wheel.

To me, once you have to do that, it’s not really self-driving at all.

So somebody is going to have a breakthrough here.

And it looks to me like, based on what you’re saying, Waymo is pretty close.

So I think it’s worth watching.

I do as well.

If this becomes a real commercial product as opposed to just something that they’re ferrying people around in, that could bump up Google’s market cap by a lot.

Yeah, and I think you read the same data I did this week that they’re going to start selling more advertising.

And they’ve got a lot of avenues to sell more advertising.

And I think that combining that and combining the self-driving car business, which could be huge, which they could get in bed with, with Musk on that as well, at some juncture.

Sure.

Although, yeah, Musk, I think Musk wants to do this himself to keep Tesla’s market cap.

If you could do this as a JV, Alphabet and Tesla, I think Musk would say to himself, no,

My market cap right now relies on my AI capacity to be in the self-driving business.

If I share it with anybody, it doesn’t help my market cap as much.

Well, these positives help to offset things we’ve also talked about.

The threat that Alphabet has of an AI search engine that doesn’t censor things that many people would go to simply because it’s not Google.

Well, let’s do this.

I think we should come back to this if any of these people makes an announcement, and it may be that Musk is going to make one in October, I don’t know,

that they have a self-driving vehicle that they’re willing to take to the government and get it certified so that it can be used any place in the United States.

When we get closer to that, let’s revisit this.

Yeah, because I think ultimately, while it won’t be part of the everyday lexicon, like did you hop in a self-driving car today, anytime soon, but it’s in the future and it’s something we can definitely see.

Yeah, we’ll come back.

Yeah.

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