Uber’s Business, Cash Flow, and AI are Why it Will Set a New High
Uber’s (NYSE: UBER) stock price will set a new high because of three factors: its business, cash flow, and AI. These factors set Uber apart from competitors, making it the leading player in ride-hailing and autonomous driving and an attractive target for investors. Unlike other cutting-edge technology companies, Uber makes money today and uses it to build value for investors while developing the future of transportation.
Uber Leads Self-Driving Industry and Push to Full AV Capability
Uber’s technological advantage is its use of machine learning and AI to connect drivers and riders. The system uses real-time data, including GPS, and integrates payment portals and communications systems to improve users' accuracy and efficiency across mobile and desktop platforms. Uber also applies that technology to automated fleets, making it the leading player in the robotaxi revolution.
Make no mistake: automated driving is on the way and will become the most-used form of transportation, reducing costs for consumers and vehicle operators while improving overall safety. Uber will be central to the revolution, managing fleets for independent operators and large corporations.
Uber has partnered with autonomous driving leaders like Waymo (formerly the Google Self-Driving Car Project) and WeRide. The deal with WeRide is expected to bring autonomous service to the UAE this year, and Waymo includes services in Atlanta and Austin.
The advantages are that these vehicles have been proven safe, although there are limitations. They include restricted areas, an overly cautious driving style, and remote operators. Remote operators account for a small percentage of driving miles but are critical to operations. Among the opportunities for Uber and its investors is advancing automated technology.
That’s why Uber partnered with NVIDIA (NASDAQ: NVDA), the leading full-stack AI infrastructure and services provider. The deal combines Uber’s torrent of driving data with NVIDIA’s cutting-edge Cosmos platform and DGX Cloud. The Cosmos platform is among NVIDIA’s newest offerings and is focused on accelerating physical AI, including robotics and AV.
The partnership is intended to assist AV developers with training their models and reducing the time until widespread, commercially viable autonomous vehicles are available.
Uber’s Business is Good, Cash Flow is Good, Buy Backs are Good
Uber’s financial advantage is its business and cash flow. Business is booming as service penetration is compounded by expanding verticals, and earnings leverage is improving. Highlights from 2024 include double-digit revenue growth with strength in rides and deliveries, outperformance on the top and bottom lines, wider margin, and robust cash flow. The $1.8 billion in 2024 cash flow is 15% of revenue, with nearly 95% classified as “free cash flow.”
The cash flow and FCF allowed the company to reduce debt, aggressively repurchase shares, and reinvest in the business. Debt and share count reduction are expected to continue in 2025 and provide tailwinds for the stock price. Equity, a measure of shareholder value, nearly doubled.
Uber’s Analysts Drive This AV Market: Indicate a 35% Upside
Uber’s analysts are driving this market with coverage on the rise, sentiment firm at Moderate Buy, and steady price targets, indicating a 35% upside from critical support levels. These trends will continue in 2025 because of the business momentum and catalyze higher share prices. Institutional activity aligns with the analysts' sentiment, including nine consecutive quarters with buying volume outpacing the selling.
They own more than 80% of the stock and provide a solid support base for the market.
The stock price action in early 2025 is favorable to higher prices. The market is gaining traction, with volume rising and the indicators set for a bullish swing. The critical resistance targets include the 30 and 150-day EMAs, which may be broken soon. If not, this market could remain range-bound until the Q1 earnings report is released later in the first half.
The analysts are forecasting another solid quarter, but growth is to slow to 15% from 20%, which is unlikely given the trends. Uber’s dominant position, expanding verticals, and penetration suggest it can produce a 17th quarter of sequential growth.
