Uber’s share price dipped by 2% today despite the exciting robotaxi (self-driving taxi service) deal with Mercedes, Nvidia, and Waabi. Uber last closed at $80.05, but fell further in the aftermarket to $79.90.
The drop came ahead of its Q4 2025 earnings report due on Wednesday, February 4, 2026. Although the partnership with Mercedes and Nvidia significantly improved the company’s prospects, investors are skeptical about its impact on short-term profitability and margins. Many speculate that guidance for Q1 2026 will signal lower margins, which can spark stock dumpings after the report. The pre-emptive sell-off caused today’s dip.
What is the Robotaxi Deal?
The Robotaxi deal aims to put self-driving taxis on the street with reliable safety features that pass regulatory constraints. The taxis will be fully autonomous and will leverage Nvidia AI prowess and Mercedes’ sensors and engineering edge. The first level execution includes successfully deploying new S-Class luxury sedans integrated with Nvidia’s DRIVE Hyperion hardware.
Robotaxi’s feature AI tech is trained on Nvidia simulations and Halos certification reliability to provide uncompromising safety. Earlier reports suggest that it has redundant safety systems expanding beyond brakes and steering and into the entire architecture of the vehicle. The vehicle will be initially launched in major cities around the world, and hence will require meeting AV (Autonomous Vehicle) standards everywhere.
What’s Waabi’s role?
Waabi is a Canadian startup that specializes in “Physical AI” designed to navigate vehicles through highways and city streets without needing rich predefined map data. It has a live $200 million deal with Volvo to provide autonomous truck software. The autonomous trucks from the Waabi-Volvo partnership are currently in use on Texas highways (subject to regulatory conditions).
Waabi has also raised $1 billion from big players like Uber, NVentures, Porsche, and BlackRock, indicating industry confidence in its expansion into robotaxis. It will provide 25,000 autonomous vehicles to be deployed on Uber’s platform. Thus, Uber will stay light on ownership, but will dominate online taxi services.
Robotaxis in the Future: Uber’s Margin Moonshot
Uber stands to win big when robotaxis are realized. Uber’s net margin in Q3 2025 was near 33%. This implies that drivers take 60-70% of revenue from each booking. Once robotaxis start rolling out, driver wages can drop to near zero depending on how well AVs are integrated.
As driver wages decrease, Uber’s major expense will be reallocated into vehicle maintenance and AI software updates. Self-driving cars and tech architecture that support them can be highly expensive initially, but will get cheaper in the long run, which will send Uber’s profit margin to unprecedented highs.
Roadblocks that Drain Investor Confidence
Uber sees its expansion into AVs as a necessary step to future-proof itself. The partnership with Mercedes and Nvidia is also a Critical Win. But investors see huge roadblocks ahead in the execution of Robotaxis, including regulatory delays and cost overruns.
Investors fear that the upfront cost may overrun, squeezing the margins for an extended window. Moreover, the maintenance cost for AV vehicles and their tech can initially surpass that of driver wages. In short, investors sense short-term losses as the company is optimizing for the long-term wins.
Wall Street Sees a 40% Upside for Uber
Morgan Stanley’s top analyst, Brian Nowak, projects a 37.41% upside for Uber, with a target price of $110. Justin Post from Bank of America Securities also projects the same numbers. The average from more than 34 Wall Street analysts indicates that Wall Street expects a 40.87% upside with a target price of $112.77.
