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Alphabet's New Service Center to Boost Self-Driving Presence

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Barring EU charges, Alphabet's competitive advantage and growth in cloud computing and driverless car segments should boost first-quarter earnings.
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Alphabet GOOGL is leaving no stone unturned to bolster presence in the self-driving space on the back of growth initiatives taken by Waymo.

This is evident from the company’s latest plans of establishing an 85,000-square-foot technical service center in the Phoenix area near Mesa, AZ, which is anticipated to open in the second half of the year.

The new center will be an addition to Waymo’s existing service center, which is located at Chandler in the suburb of Phoenix.

We believe Waymo’s latest move will strengthen the capability of handling technical issues of its self-driving cars. Moreover, the opening of this service center is likely to aid the company in delivering enhanced car servicing.

This will aid the company in serving the growing commercial fleet in Phoenix.

Growing Autonomous Driving Initiatives

Alphabet’s robust self-driving technology and winning deals for testing its driverless cars are acting as tailwinds.

Recently, Waymo unveiled its first paid self-driving taxi, Waymo One in Arizona, which currently serves people of suburbs of Phoenix namely Chandler, Tempe, Mesa and Gilbert. Moreover, the company simplified the system by creating an app via which riders can avail the service.

Further, Alphabet expanded its scope in this particular space by rolling out self-driving trucks for freight services. Notably, this initiative is also gaining steam and driverless trucks are anticipated to come on road soon. Further, the company’s efforts toward licensing its technology to automakers for direct selling to customers remain a key catalyst.

Additionally, the company is reportedly seeking outside funding in order to expand the autonomous vehicle business unit.

Growth Opportunities & Competitive Edge

We believe growing autonomous driving initiatives are likely to aid Alphabet to penetrate the global self-driving car and truck market. Per Grand View Research, this market is projected to witness a CAGR of 63.1% between 2021 and 2030.

Further, per Zion Market Research, this market is expected to witness a CAGR of 25.7% between 2018 and 2024 and hit $26.58 billion by 2024.

Moreover, the above-mentioned growth prospects are alluring enough to attract companies like Apple AAPL, Amazon AMZN, Baidu and General Motors GM. Notably, these companies are also making advances to strengthen their presence in the autonomous driving space.

Apple, in an attempt to speed up the launch of its self-driving car, hired Doug Field, a former chief vehicle engineer of Tesla, and Jaime Waydo, a former engineer of Waymo and a veteran of NASA, for its self-driving project.

Further, Amazon patented an autonomous driving technology that deals with navigation of traffic jams, construction and weather condition.

Meanwhile, the China search company, Baidu added Apolong, an autonomous minibus, to its Apollo autonomous driving platform.

Additionally, General Motors is working to strengthen its driverless project, Cruise Automation. Recently, the company teamed up with DoorDash to test a food delivery service in San Francisco, using its autonomous vehicles.

Nevertheless, Alphabet’s strong endeavors toward enhancing its self-driving service with an increasing number of service centers and commercial autonomous driving cars will continue to give it a competitive edge against these above-mentioned companies.

Zacks' Top 10 Stocks for 2019

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