To find out why tesla (TSLA 6.43%) is an artificial intelligence (AI) company, so you need to understand how it differs from companies such as: oracle (ORCL 9.60%) And why it could be a long-term winner if the AI bubble bursts.
AI bubble?
History suggests we may be in an AI bubble, but it also suggests that many will prematurely call the top.
Let’s rephrase it like this. Two long-term investors can agree that there is a bubble when the price of oil is, say, $60. The price reached $120, the bubble burst, and then it fell to $80, but then it rose relentlessly. The $60 seller waxes lyrical that this is a bubble and will never buy again for $80. Holders of $60 are enjoying huge profits even after being badly burned by the bursting of the bubble.
There is also another approach. A third investor may find a company that faces difficulties when the bubble bursts but can actually make a profit in the long run. Tesla could also be in this position.
Today’s changes
(-6.43%) $-26.92
current price
$391.53
Key data points
Market capitalization
$1.5 trillion
daily range
$388.60 – $424.60
52 week range
$281.85 – $498.83
volume
4.2M
average volume
59.7 million
gross profit
19.07%
Why Tesla is in a good position
The rationale behind this argument is twofold. First, Tesla is a company that embeds AI into its own solutions (electric cars, robotaxis, humanoid robot Optimus), rather than a company that builds AI capabilities to sell to third parties. To be clear, Tesla, along with SpaceX, is an investor in chip manufacturing initiative Terafab.
SpaceX needs chips for its satellites and AI business xAI, while Tesla needs chips for Optimus and eventually EVs. In other words, the Terafab project is aimed at securing the supply chain for Tesla and SpaceX, not selling chips to other companies.
Importantly, demand for Tesla’s solutions comes from energy, EV, robotaxi, and Optimus customers, and these solutions incorporate AI. A massive $25 billion capital investment in 2026 is aimed at supporting the growth of these products and the supply chains that protect them. The ultimate demand will not come from AI computing.
Image source: Tesla.
This situation sets Tesla apart from large companies like Oracle, which are spending heavily and taking on debt to build up computing power that they plan to sell to other companies such as OpenAI.
If the bubble bursts and demand for AI computing subsides, companies like Oracle, which has a $300 billion cloud computing contract with OpenAI, could be saddled with massive debt, depreciating assets and slowing revenue growth. There is a large possibility of a downside.
Why Tesla could emerge as a long-term winner from the AI bubble burst
Again, if the AI bubble bursts anytime soon, Tesla and its stock won’t be outright winners. When the inevitable correction occurs, almost every company will be hurt by the importance of AI in the global economy and the frictions arising from the misallocation of investments. That includes Tesla.
This brings us to our second point. If people still want energy, EVs, robotaxis, and Optimus after the initial shock of the bubble burst, Tesla can continue to grow in the long run. This is because the main source of demand is not directly linked to AI demand.
Image source: Getty Images.
In contrast, hyperscalers such as Oracle and AI companies such as OpenAI must adapt to new long-term pricing realities when modeling revenue growth assumptions. Additionally, the technology, components, and infrastructure Tesla needs for production may become more affordable after the market corrects.
What it means for Tesla investors
None of this is to argue that Tesla isn’t a risk stock. Tesla continues to face execution risks surrounding the revenue expansion and growth of Robotaxi and Optimus. Additionally, a merger with SpaceX would definitely put Tesla shareholders at risk of an AI bubble bursting, given SpaceX’s dependence on future revenues from its orbital AI and xAI businesses.
Overall, there is good reason to believe that Tesla will ultimately emerge as a stronger company after the AI bubble bursts. Whether it’s months, years, or even 10 years from now, the productivity gains from incorporating AI into solutions are keeping stocks on the upswing and protecting them from the long-term downside.
