Alphabet's Other Bets segment, which includes its Waymo robotaxi business, reported a widening operating loss of $2.05 billion in the third quarter, up from $1.43 billion a year earlier, the company said in its earnings report on Wednesday. The segment generated $372 million in revenue, up 8% year-over-year, but this represented just 0.3% of Alphabet's total sales, underscoring Waymo's minimal contribution to the parent company's bottom line despite heavy investment.
Waymo operates in 15 major US cities and recently expanded service to San Antonio, San Diego and Tampa, CEO Sundar Pichai said on the earnings call. The robotaxi business also plans to expand into Canada, Germany, Singapore and Spain, with service in Germany scheduled for 2027, marking its first expansion into the European Union. Waymo holds a commanding lead in the US robotaxi market, though it faces emerging competition from Amazon's Zoox and Tesla, while globally its steepest competition comes from China's Baidu Apollo Go.
The mounting losses reflect Alphabet's broader cash drain as it invests heavily in artificial intelligence infrastructure. The company reported negative free cash flow of over $9 billion for the quarter and maintained its full-year capital expenditures forecast at between $195 billion and $205 billion, largely for AI infrastructure. This shift marks a departure from years when Alphabet's profitable advertising business could comfortably fund Waymo as a side project.
Waymo has taken steps to fund its expansion independently. The robotaxi business closed a $5 billion term loan this month, its first debt financing, and raised $16 billion at a $126 billion valuation in February in a funding round led by Alphabet with participation from investors including Andreessen Horowitz, Fidelity, T. Rowe Price, Sequoia Capital and Kleiner Perkins. The company has now driven more than 300 million fully autonomous miles, Pichai said, and last week began offering driverless rides to and from Las Vegas airport after earlier announcing airport service in five other cities.
For investors in Alphabet, Waymo's losses mean the company's cash burn extends beyond its core business challenges. Alphabet reported an earnings and revenue miss on Wednesday, sending its stock down almost 10% in extended trading. By contrast, Tesla's Robotaxi network has completed about 3.8 million miles without a human driver, according to the company's website, and CEO Elon Musk said the Robotaxi business should become a meaningful revenue contributor by the second half of 2027.