The Autonomous Vehicle Revolution Is Coming: Should You Forget Tesla and Buy This Glorious Growth Stock Instead?

According to a forecast earlier this year from Cathie Wood's Ark Investment Management, autonomous vehicles could create a $10 trillion opportunity for the ride-hailing industry over the long term. Tesla (NASDAQ: TSLA) is one of the firm's top picks to lead the autonomous revolution, because of its self-driving robotaxi called the Cybercab, which is scheduled to enter mass production in 2026.

Tesla plans to build a ride-hailing network for the Cybercab where it can autonomously haul passengers around the clock and unlock a lucrative new revenue stream for the company. However, Tesla might be behind the curve already, because Uber Technologies (NYSE: UBER) is making some major moves in this space.

Uber currently operates the world's largest ride-hailing network, and it has partnered with over 20 different companies developing autonomous vehicles and delivery robots -- and some of them are already completing thousands of trips every day. Here's why it might be a better autonomous vehicle stock to buy than Tesla.

Image source: Getty Images.

Uber's scale is unmatched

Participating in the autonomous revolution requires more than just developing a self-driving car. Building a ride-hailing network capable of providing a vehicle within minutes of a customer pulling out their smartphone is the bigger challenge, but it's something Uber has mastered with its human-driven network. This is why 189 million people use its platform every month.

But it isn't just about the users. Uber has spent 15 years perfecting its infrastructure in cities all over the world so it can manage demand with maximum efficiency. If a ride-hailing network doesn't deploy enough cars in a given location, it can't provide a convenient user experience. On the other hand, if it supplies too many cars, many of them will sit idle during quiet periods, which destroys profit margins.

For those reasons, Uber's transition to autonomous vehicles will be almost seamless. It's unclear whether Tesla will ever achieve the same level of scale, which will make it extremely difficult to replicate Uber's proficiency. In turn, that will make it very hard to compete for customers.

Many other developers of autonomous vehicles have recognized these challenges, so they have partnered with Uber. By tapping into the world's largest ride-hailing network, they can accelerate their path to commercialization.

Alphabet's Waymo is one of them. It already completes over 250,000 paid, fully autonomous trips every month across five U.S. cities, using a combination of its own network and Uber's network. WeRide, Lucid, and China-based Baidu are just some of Uber's other partners.

Overall, Uber wants to have autonomous vehicle deployments in 10 cities worldwide by the end of 2026, with a further expansion in 2027.

Autonomous vehicles pose less risk to Uber compared to Tesla

Developing the hardware and software for an autonomous vehicle is extremely capital intensive. Tesla has been working on its full self-driving software alone since around 2013, and it still hasn't been approved for unsupervised use anywhere in the U.S. yet. As a result, nobody knows if the Cybercab will be as technically sound as a Waymo vehicle, for instance, creating yet another risk for the company.

Uber doesn't have that problem, because it merely supplies a platform and takes a fee from every ride. In fact, the transition to autonomous vehicles could have an immediate -- and significant -- positive impact on the company's financial results.

During the third quarter of 2025 (ended Sept. 30), Uber reported gross bookings of $49.7 billion, which was the total amount customers paid for every ride, food order, and commercial delivery through its platform. Human drivers earned $22 billion during the quarter, which was the single largest component of the gross bookings figure.

Uber was left with just $13.4 billion in actual revenue after accounting for that enormous cost (among other costs), so as autonomous vehicles gradually replace human drivers, they will be a huge tailwind for the company's top-line results.

Uber stock looks like a bargain relative to Tesla stock

An even bigger reason to like Uber stock compared to Tesla stock right now is valuation. Uber's price-to-sales (P/S) ratio is around 4 as I write this, whereas Tesla's is a whopping four times higher at 16.4. Uber grew its revenue by 20% year over year in the third quarter, almost twice the pace of Tesla's 12% growth, so the wide valuation gap doesn't make a lot of sense.

TSLA PS Ratio data by YCharts

Further, Tesla stock trades at a staggering price-to-earnings (P/E) ratio of 298, making it almost nine times more expensive than the Nasdaq-100 index, which trades at a P/E ratio of 33.6. In my opinion, it's very hard to justify buying Tesla stock right now for any reason, irrespective of what Uber is doing.

If Ark Invest is right about autonomous ride-hailing becoming a $10 trillion industry, it seems Uber is in a better position to seize the opportunity. Plus, when you add valuation into the mix, it becomes even easier for investors to pick Uber over Tesla.

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Baidu, Tesla, and Uber Technologies. The Motley Fool has a disclosure policy.