The S&P 500 has literally dozens of high-quality growth companies, meaning it’s a bit of a challenge to pick a single one as my favourite. In reality, I can’t follow all of them, as there are too many to keep track of. So I will be undoubtedly be missing out on some gems.
Still, I would say Uber Technologies (NYSE: UBER) has been my favourite S&P 500 growth stock over the past year. And it has been on fire, surging 41.6% since the start of 2025.
That return absolutely demolishes the index, which is down 3.9% year to date.
Here’s why I think Uber has a very bright future ahead of it, and why it’s now one of my top holdings.
Powerful network effects
As most will be aware, Uber is a global rideshare and food delivery giant. It ended 2024 with over 171m customers, doing 33m trips a day on average. Annual revenue grew 18% year on year to $44bn.
In the past, a lack of profitability was a concern as Uber incinerated cash in its all-out pursuit of growth. However, over the years, the firm has exited loss-making markets and ditched costly side quests, including developing autonomous vehicles (AVs) and electric flying taxis.
As a result, profitability has been transformed. Free cash flow has gone from an adjusted $1.1bn in 2022 to an expected $8.1bn this year. Wall Street sees this rising above $12bn by 2027!
Therefore, the company is rapidly becoming a cash machine. It benefits from incredibly strong network effects, which means the service becomes more valuable as more people use it (drivers and fares).
I recently attended the Chris Eubank Jr vs Conor Benn fight in London. Many many of the 65,000 people who went were on their phones afterwards trying to get an Uber. This incredibly powerful app — and trusted brand — is becoming ubiquitous worldwide.
Robotaxi opportunity
The biggest risk I see here though is Tesla, whose robotaxi ambitions could be a long-term threat to Uber’s business model. Of course, Elon Musk has been promising robotaxis for years and they’re still not on the roads. But this is a risk that can’t be ignored.
To counter this threat, Uber has been partnering with dozens of other AV firms. Indeed, these announcements have been coming thick and fast recently:
- 24 April: Volkswagen plans to deploy its Buzz ID minivans autonomously on the Uber platform, starting in Los Angeles.
- 1 May: May Mobility aims to deploy thousands of AVs on Uber over the next few years, starting in Texas in 2025.
- 2 May: Deal with Momenta for international markets outside of the US and China.
- 5 May: Expanded partnership with WeRide to 15 cities outside the US, including Dubai.
- 6 May: Announced a partnership with China’s Pony AI to launch robotaxis in the Middle East.
In future, driverless taxis could cut travel costs and increase customer demand, eventually supercharging Uber’s profits. Clearly then, it isn’t just going to just roll over for Tesla and intends to capture a massive slice of the global robotaxi market.
The stock is trading at 27 times expected earnings for 2025, which isn’t outrageous for a world-class growth company. I think Uber is worth considering before or after its Q1 earnings tomorrow (7 May).
