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Will Alphabet’s 4Q16 Results Include an Update on Waymo?

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Jan. 24 2017, Updated 10:38 a.m. ET

Waymo technology

As Alphabet (GOOGL) reports its 4Q16 earnings this week, the company’s autonomous vehicle unit will be one of the segments under the sharp focus of investors and analysts.

Alphabet recently separated its autonomous driving operations into a standalone company, Waymo, which showcased a self-driving minivan at the Detroit Auto Show earlier this month. The minivan was built by Fiat Chrysler Automobiles (FCAU) and is equipped by Waymo with autonomous driving systems, showing how Waymo will collaborate with independent automakers to produce vehicles featuring its self-driving technology, rather than manufacturing vehicles in-house itself.

If such collaboration is the approach that Waymo intends to take to commercialize its autonomous driving systems, investors will be watching closely for updates on what other automakers Waymo may be courting to adopt its technology and how far the talks have progressed.

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Autonomous driving systems arms race

Besides Fiat Chrysler, Ford Motor (F), General Motors (GM), and Tesla (TSLA) are among the other US (SPY) automakers pushing toward autonomous driving—all of whom represent Waymo’s potential customers. However, these automakers are developing their own driverless systems, posing competition to Waymo. Investors will be looking for hints as to how Waymo intends to counter the competition or persuade these rivals to adopt its driverless system in their cars.

Waymo has already said that it has managed to reduce the cost of autonomous driving systems significantly and has developed a full suite of self-driving sensors, which means it could present itself as a provider of ready-made, affordable self-driving systems to save traditional automakers time and money.

Wall Street expectations for Alphabet’s 4Q16 earnings

As for the entire Alphabet organization, the consensus analyst estimate calls for revenue of $25.1 billion and adjusted EPS (earnings per share) of $9.66 in 4Q16. This suggests an 18% rise in revenue and an 11% improvement in earnings as compared to 4Q15.

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