Why Tesla Stock Is Considered Undervalued in AI
One experienced analyst regards Tesla as the "most undervalued AI name." Tesla's shares (TSLA 3.46%) have surged to new record highs this year, with even greater growth expected in 2026. This potential expansion is driven less by car manufacturing and more by artificial intelligence (AI), which could become the largest growth opportunity ever.
Tesla’s Unique Market Position
Traditionally seen as an electric vehicle (EV) company, Tesla’s valuation stands out. Its shares trade at nearly 17 times sales, while competitors like Rivian Automotive and Lucid Group trade between 3 and 7 times sales.
Two main factors explain this significant valuation gap:
- Tesla is an established EV manufacturer with global brand recognition and exceptional access to capital, backed by a $1.4 trillion market cap.
- The EV industry has many financial failures, with over 30 EV startups failing in the past decade.
Challenges in the EV Industry
Developing a new EV can take 10 to 20 years from design to production, especially for startups lacking manufacturing facilities. Launching an EV business with just one model in production demands billions of dollars and continuous access to financial markets for funding.
Tesla's growth potential is less about making cars and more about leading in AI, which may prove to be the largest growth opportunity in history.
Author’s summary: Tesla’s value extends beyond electric vehicles, driven by its AI potential, strong market presence, and resilience in a challenging industry.