Investment bank RBC Capital Markets on Thursday threw its weight behind DoorDash's proposed $17 billion acquisition of Instacart, calling the deal's logic straightforward. But the bank also delivered a caution: investors may need to stomach elevated integration spending through at least 2028 as the two delivery giants are stitched together.
The deal, announced earlier this week, would combine DoorDash's vast restaurant delivery network with Instacart's stronghold in grocery delivery. RBC believes the combination could feed more orders to both platforms, while shared advertising and software tools could help merchants sell more across both apps. Over time, merging the technology stacks could also eliminate duplicate costs—the classic "synergy" pitch that often underpins big mergers.
Why the timeline matters
RBC's key point is the calendar. Merging two large platforms and upgrading them tends to pull expenses forward, meaning the cost savings may not show up on the bottom line for years. The bank estimates that integration spending could remain elevated through at least 2028, which is a longer runway than some investors might expect.
This is a familiar pattern in tech M&A. When companies combine complex systems—like delivery logistics, payment processing, and merchant tools—the initial phase often involves heavy spending on engineering, data migration, and customer support. Only after that work is done do the promised cost cuts and revenue gains typically materialize.
For DoorDash, the deal also comes at a time when investors are increasingly scrutinizing big-ticket spending across the tech sector. Concerns about AI-related capital expenditures have already rattled markets, with Nasdaq futures sliding on AI spending fears and Treasury yields dropping as investors worry about the cost of ambitious projects. While DoorDash's integration spending is not AI-related, it adds to a broader narrative of tech companies prioritizing long-term growth over near-term profits.
What the deal means for the delivery landscape
DoorDash's acquisition of Instacart would create a delivery powerhouse spanning restaurants, groceries, and other retail categories. The two companies serve overlapping but distinct customer bases: DoorDash is known for quick restaurant deliveries, while Instacart has built deep relationships with grocery chains like Kroger, Costco, and Albertsons.
RBC sees clear cross-selling opportunities. For example, a customer ordering dinner through DoorDash might be prompted to add groceries from Instacart, and vice versa. Merchants could also benefit from a unified advertising platform, allowing brands to reach shoppers across both apps with a single campaign.
On the cost side, combining the two companies' delivery networks and technology could reduce redundant spending on things like app development, data centers, and customer support. But RBC warns that realizing those savings will take time and upfront investment.
What it means for investors
For everyday investors, the key takeaway is that DoorDash's acquisition of Instacart is a long-term bet. The deal is expected to close in the coming months, but the financial benefits—if they materialize—may not show up in earnings reports until well after 2028.
That means investors should be prepared for DoorDash's near-term profit margins to be squeezed by integration costs. The company may also issue more debt or stock to fund the deal, which could dilute existing shareholders.
RBC's endorsement is a positive signal, but it comes with a clear caveat: patience will be required. As with many large tech mergers, the risk is that integration proves more difficult or expensive than planned, delaying the promised synergies.
The broader market is already wary of big spending commitments. Morgan Stanley recently highlighted the long runway for Amazon Web Services growth despite heavy spending, and tech stocks have been volatile on AI spending worries. DoorDash's deal adds another layer of uncertainty for investors who are already questioning whether big bets will pay off.
Still, RBC's analysis suggests the deal's strategic logic is sound. If DoorDash can successfully integrate Instacart and unlock the promised synergies, the combined company could be well-positioned in the competitive delivery market. But investors should weigh that potential against the reality of higher costs for the next several years.
As always, it's wise to consider how this fits into your overall portfolio. Mergers and acquisitions can be rewarding, but they also carry execution risk. For now, the message from RBC is clear: the deal makes sense, but the payoff will take time.
