The Motley Foolยท2025-04-10 12:00Core Insights - Alphabet's Waymo business presents a significant growth opportunity in the robotaxi sector, with an average of 150,000 trips per week last year, expected to increase as it expands into more markets [1] - There is a likelihood that Alphabet will spin off Waymo within the next five years to unlock value and streamline operations [1][5] Expansion and Costs - Waymo is expanding into new cities, including Atlanta, Washington, D.C., and Tokyo, which will increase operational costs significantly [2] - Alphabet is investing heavily in artificial intelligence, with an expected expenditure of $75 billion this year, which may complicate its operations as Waymo grows [3] Competitive Landscape - Alphabet is facing competition in the AI space, particularly with the rise of AI chatbots that could threaten its search dominance [4] - The company is investing in its Gemini chatbot to maintain its market position against competitors [4] Valuation and Spin-off Potential - Waymo was estimated to be worth over $45 billion last year, and its valuation is likely to increase as it expands [5] - A spin-off could allow Alphabet to focus on core operations and potentially save billions in expansion costs, while also unlocking value for investors [6][8] Investor Implications - A spin-off of Waymo could provide investors with stakes in two high-growth companies, enhancing their investment choices [8][9] - The current valuation of Alphabet is modest, trading at 18 times its trailing earnings, making it an attractive investment opportunity regardless of the spin-off decision [9][10]