Uber's Partnership With Amazon's Zoox Is a Game Changer

At roughly $73 per share as of this writing, Uber Technologies (NYSE: UBER) is trading well below its 52-week high of nearly $102.

This pullback is, in part, a reflection of uncertainty regarding how the self-driving cars will impact Uber's business. Investors are likely becoming increasingly concerned that companies developing their own self-driving technologies will eventually be able to leapfrog Uber's ride-sharing network and ultimately erode the company's dominant market position.

However, a strategic partnership announced on Wednesday with Amazon's autonomous vehicle unit, Zoox, points to a much more favorable scenario for the ride-hailing giant. Rather than being disrupted by the self-driving transition, Uber is actively positioning its platform as the indispensable demand-generation engine for the autonomous era.

With the stock trading at a discount to recent highs and the company continually expanding its network of self-driving partners, investors have to ask whether this is a compelling opportunity to buy into a highly profitable tech platform before the AV market fully matures.

Image source: Getty Images.

Outsourcing the hardware risk

Under the newly announced multiyear agreement, Zoox's purpose-built robotaxis -- which lack traditional steering wheels and pedals -- will be available to Uber users in Las Vegas beginning this summer. The companies plan to expand the service to Los Angeles by mid-2027.

The deal is a crucial validation of Uber's capital-light approach to the future of transportation. Developing autonomous hardware and software arguably requires tens of billions of dollars in capital expenditures and entails significant regulatory and execution risks. Instead of trying to build its own fleet of robotaxis from scratch, Uber is leveraging its massive existing ride-sharing user base to partner with the developers who are taking on that hardware risk.

Uber ended 2025 with 202 million monthly active platform consumers. For hardware companies like Zoox trying to achieve utilization and scale, that built-in audience is incredibly valuable.

This is the first time Zoox has agreed to offer its rides through a third-party application, underscoring the gravity of Uber's network effects.

Uber CEO Dara Khosrowshahi captured the essence of this strategy in a recent press release announcing a suite of solutions to help AV partners monetize their autonomous vehicles. While noting that the innovation in autonomy is moving fast, he said that "meaningful commercialization will take much longer."

This view helps explain why management has conviction that Uber will serve as the premier go-to-market partner for AV players globally.

Massive cash generation funds the transition

While the market obsesses over the long-term autonomous threat, Uber's core business is currently generating spectacular financial results. Indeed, the company does not need robotaxis to take over tomorrow to reward shareholders today.

In the fourth quarter of 2025, total revenue climbed 20% year over year to roughly $14.4 billion. This top-line momentum was supported by a 22% year-over-year jump in gross bookings, which reached $54.1 billion. The underlying segment data was equally robust, with mobility gross bookings rising 20% and delivery gross bookings surging 26% year over year.

But the most encouraging factor for the stock right now is the company's cash flow from operations. Uber generated a staggering $9.8 billion in free cash flow for full-year 2025, a 42% increase from 2024.

To put that absolute figure into perspective, Uber's current market capitalization sits at roughly $150 billion. A cash-generation engine of this scale provides management with massive future optionality. It gives the company the financial firepower to aggressively buy back stock and optimize capital deployment while it patiently integrates self-driving technology into its app over the coming decade.

Is now a good time to buy Uber stock?

Because the stock has pulled back, the valuation looks attractive. Uber currently trades at roughly 15 times its 2025 free cash flow.

At this multiple, the market is not demanding immediate autonomous dominance or flawless execution to justify the price. A valuation like this, rather, just prices in more of the same -- that Uber maintains a dominant market share in ride-sharing and continues its trajectory of double-digit revenue growth and further margin expansion.

There are, of course, some notable risks. For instance, as companies invest aggressively in AV technology, competition could intensify. In addition, Uber and its AV partners will likely have to navigate an evolving regulatory environment as self-driving cars become more mainstream over time.

Still, the company's reasonable valuation and significant free cash flow help offset these risks. Ultimately, I think this is a good entry point into the stock -- but only for investors willing to watch closely as Uber's positioning in the evolving AV market evolves over time. If the landscape becomes riskier for Uber over time, it might eventually make sense to bail on the stock.

Daniel Sparks and his clients has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Uber Technologies. The Motley Fool has a disclosure policy.