In a report on Thursday, Morgan Stanley cut its valuation on Waymo to $105 billion from $175 billion, based a discounted cash flow analysis.
"Over the past year, there have been a series of hurdles relating to the commercialization and advancement of autonomous driving technology," the analysts wrote. "Most notably, we underestimated how long safety drivers are likely to be present within cars and the timing of the rollout of autonomous rides-sharing services."
Waymo, formerly Google's self-driving car project, has made aggressive strides of late, receiving regulatory approvals, improving driving systems and partnering with other auto manufacturers. However, CNBC reported in August that Waymo's self-driving car efforts still rely heavily on human elements, including having safety drivers present in rides.
Morgan Stanley said the biggest factors in lowering its valuation are that the overall industry is developing more slowly than anticipated and that losses in ridesharing will continue mounting, largely because of the continuing need for safety drivers.
In terms of Alphabet's current value, Morgan Stanley has a price target of $1,450, which implies a market cap of about $1 trillion. That assessment values Waymo at about $20 billion, "given industry uncertainty and investors' lower willingness to pay for cash-burning entities."