We recently 12 Best AI Stocks to Lead Big Tech Race to $4 Trillion, According to Renowned Wall Street Analyst. Tesla Inc. (NASDAQ:TSLA) ranks #10 on the list, so it's worth taking a closer look.
Wedbush Securities analyst Dan Ives said in a recent note that big tech companies are now in a “race” to dominate the $4 trillion AI market, calling GPUs the new “oil” or “gold” in tech. Ives said the AI ”party” is just getting started, and the clock is “running from 9pm to 4am, with other companies in the tech industry joining in.” Ives believes investing in GPUs and data centers is “the only option.” Ives believes that the “first wave” of AI will benefit the big tech companies that lead the AI race, and that the second, third and fourth “derivations” are starting to show trickle-down effects for other companies.
Ives recently spoke at another investing event, predicting that the AI-driven bull market could continue for another two to three years, and that investors should expect big tech companies to be worth between $3 trillion and $4 trillion in market capitalization in a year's time.
“The tech bull market has only just begun,” Ives was quoted as saying.
In his latest note, Ives highlighted several stocks that he believes will benefit from the AI revolution. In this article, we take a closer look at these stocks, discuss AI-related growth drivers, and see if they are sound long-term investments. For each stock, we mentioned hedge fund sentiment. Why are we interested in stocks that hedge funds are flooding into? The reason is simple: our research shows that you can outperform the market by mimicking the top picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small and large stocks every quarter, which have returned 275% since May 2014 and outperformed the benchmark by 150%. (Click here for details).
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Tesla Inc. (NASDAQ:TSLA)
Number of hedge fund investors: 74
Wedbush's Dan Ives surprised everyone recently when he said in a CNBC interview that Tesla (NASDAQ:TSLA) is currently the “most undervalued AI company.” Ives believes that Tesla's “AI component” could be worth between $1 trillion and $2 trillion.
Ives expects August 8 to be a “historic day” for Tesla (NASDAQ:TSLA), as Musk is expected to unveil his robotaxi plans on Wednesday, a plan that comes after he reportedly backed away from earlier plans to launch an affordable electric vehicle for the mass market.
Ives said Tesla (NASDAQ:TSLA) could “double” in sales over the next 12 to 18 months, with plans for full self-driving taking shape in the coming months.
While Ives believes Tesla has been through a “Category 5 hurricane” due to weak EV demand, especially in China, the analyst believes the “Cinderella story” will return for Tesla Inc. (NASDAQ:TSLA) and AI will be “king.” The analyst said the weak EV demand has caused Tesla to need “adult intervention” and that Elon Musk has “stepped up” and taken the necessary steps which bodes well for Tesla Inc. (NASDAQ:TSLA). He was referring to the massive layoffs Tesla recently announced, which resulted in Tesla Inc. (NASDAQ:TSLA) reducing its workforce by 14%.
In its Q1 2024 investor letter, Baron Partners Fund said the following about Tesla Inc. (NASDAQ: TSLA):
“The bulk of the fund’s underperformance this quarter came from the fund’s 10-year investment history. Tesla Inc. (NASDAQ:TSLA). Tesla's stock price fell 29.3% during this period, dragging down the fund's first quarter performance by 13.41%. Tesla has been a significant contributor to the fund's performance since 2014, but it can also drag down quarterly performance. In the past, when Tesla's stock price has underperformed in a particular period, it has risen significantly shortly thereafter, reflecting strong growth in the underlying business. We believe this will be the case again this time, but can offer no assurances.
The end of 2022 also saw a significant sell-off. At the time, investors were concerned about a variety of external factors. They thought the company's founder and visionary CEO, Elon Musk, was distracted by his acquisition of Twitter. They also thought that the impact of COVID would weaken the Chinese economy and that US government policies would discourage purchases of Tesla cars. These concerns were overblown. The company hit milestones the following year, and the stock price doubled over the next 12 months…” (Click here to read the full article)
Overall, Tesla Inc. (NASDAQ:TSLA) ranks #10 on Insider Monkey's list. 12 Best AI Stocks to Lead Big Tech Race to $4 Trillion, According to Renowned Wall Street AnalystWhile we acknowledge the potential of Tesla Inc. (NASDAQ:TSLA), we believe AI stocks can deliver higher returns in a shorter time frame. If you are looking for AI stocks that have better prospects than Tesla Inc. (NASDAQ:TSLA) but trade at less than 5x earnings, check out our report. Cheapest AI Stocks.
Read next: Analyst sees $25 billion in new 'opportunity' for NVIDIA and Jim Cramer's recommended stocks.
Disclosures: None. This article was originally published on Insider Monkey.
