Morgan Stanley maintained its Overweight rating on Alphabet in a report dated Oct. 6, 2026, keeping its price target at $400. The bank said Waymo’s first-half mileage fell short of expectations, but described the miss as a temporary operating issue rather than a break in the long-term expansion story. Based on the current share price of $347.68, the target implies about 15% upside.
The report’s core call is that Alphabet needs agents to earn a higher valuation multiple, and that Waymo is an underappreciated differentiator in that case.
First-half mileage missed estimates across core markets
Morgan Stanley said Waymo logged 271.3 million miles in the first half, below its estimate of 280.3 million miles.
By city, San Francisco reached 82.4 million miles, 8.2% below the bank’s estimate. Phoenix came in at 92.1 million miles, 4.8% below forecast. Austin logged 21.1 million miles, 5.6% below estimate. Atlanta, by contrast, reached 8.6 million miles, 113.9% above forecast.
Morgan Stanley pointed to several temporary disruptions behind the gap. Weather led to service pauses in the first quarter. Highway-related issues that began in April resulted in a market-wide suspension of highway operations on May 19, with service only gradually returning by late July. A temporary recall affected more than 3,700 vehicles, covering nearly the entire fleet.
The bank also said autonomous driving supply constraints and geofence mapping limits may have contributed. It framed those issues as growing pains in a multi-year autonomous driving rollout.
Near-term pressure, but higher medium-term forecasts
Even with weaker-than-expected first-half data, Morgan Stanley raised its 2028 mileage forecast by about 2%. The bank said Atlanta ramped faster than expected, while launches in Denver, San Diego, and Tampa Bay came earlier than its prior assumptions.
It lifted 2027 and 2028 mileage forecasts by 1% and 2%, and raised revenue forecasts for those years by 2% and 3%. At the same time, it cut mileage forecasts for San Francisco and Phoenix by 14% and 11%, reflecting what it called growing pains in the most mature markets.
Morgan Stanley still expects Waymo to generate about $20 billion in revenue by 2032. It projects mileage and revenue to grow at compound annual rates of 83% and 89%, respectively, from 2025 to 2032.
Fleet could reach 120,000 vehicles by 2032
The bank updated its bottom-up supply and demand model for Waymo. It now expects the fleet to reach about 8,000 vehicles by the end of 2027 and about 16,000 by the end of 2028, up 1% and 2% from its previous forecast. By 2032, Morgan Stanley projects the fleet at 120,000 vehicles, implying a 79% compound annual growth rate.
Order and mileage assumptions moved with the fleet outlook. Morgan Stanley raised its order forecasts for 2027 and 2028 by 4% and 3%, and expects Waymo to reach 1.119 billion trips by 2032. Even then, the company’s share of total U.S. vehicle miles traveled would remain below 0.5%.
On geographic expansion, the report said Waymo plans to enter London, Munich, Tokyo, and Singapore. Morgan Stanley said winter operations in places such as Denver and Washington, along with progress in international expansion, will be key markers for assessing the global opportunity.
Supply remains a constraint. The bank said fleet growth, geofence coverage, and weather adaptability will determine how much demand Waymo can convert into actual miles.
Safety lead remains, though the trend weakened sequentially
Morgan Stanley said Waymo’s miles per accident fell from about 458,000 in the fourth quarter of 2025 to about 430,000 in the first quarter of 2026, then to about 370,000 in the second quarter. The bank said that sequential deterioration is worth watching.
Even so, it said Waymo’s overall safety performance remains well ahead of the human-driver benchmark. At roughly 370,000 miles per accident, the figure is about five times safer than the U.S. human-driver baseline. Morgan Stanley said safety remains a key threshold for broad autonomous driving adoption, and that Waymo still leads on that measure.
The report linked the weaker trend to higher fleet density and a broader mix of operating environments. Waymo is moving into snow conditions in places such as Washington and Denver, while also pushing into international markets including London and Tokyo. Morgan Stanley said safety performance in those new environments will need continued monitoring.
Agent integration seen as a path to re-rate Alphabet
Morgan Stanley said Alphabet needs agents to unlock a valuation multiple re-rating, with Waymo standing out as an underappreciated advantage in that framework.
The report gave examples of how Gemini Agent could be integrated with Waymo. It said a user’s calendar and email could be connected to the service so trips are planned in advance. That could include rides from a hotel to the airport, from the airport to a meeting, from the meeting back to the airport, and from the airport home. If a restaurant reservation appears in a user’s email, Gemini Agent could also arrange the round trip with Waymo ahead of time.
Morgan Stanley added that this does not mean such integration can scale immediately, because supply is still a limiting factor. The bank said it will look for examples of these functions in future Gemini agent features as a route to further revalue Alphabet shares.
Valuation framework
The $400 price target is based on roughly 24x earnings, using average earnings per share of $15 and $18 for 2027 and 2028. That implies about 1.6x PEG, a premium of roughly 35% to Alphabet’s peer median, according to the report.
In Morgan Stanley’s scenario analysis, the bull case is $460 and the bear case is $225. With the stock at $347.68, Alphabet is already near the bank’s base-case target, but Morgan Stanley still kept its Overweight rating and $400 target.
The report’s conclusion was straightforward: Waymo faces short-term mileage pressure, but the medium-term case built on city expansion and agent integration has not changed.
This article is a整理与解读 of a third-party brokerage report from Morgan Stanley dated Oct. 6, 2026, combined with public market information. The cited ratings, price targets, earnings forecasts, and related judgments are the views of the brokerage analysts and represent only the position of their institution, not the position of 潮向研究, and they do not constitute investment advice.
Markets carry risk, and decisions should be made independently. This article should not be used as a basis for buying or selling any security.
