Are you blaming yourself for not buying it? Nvidia last fall? Did you miss the ChatGPT mania this spring? Well, don’t worry. Artificial intelligence (AI) and the potential for companies to benefit from it will live on, as will the stocks that underpin it. In fact, we are still in the early stages of the AI stock era.
For example, despite all the hype surrounding AI technology today, there is one company that is still greatly underestimated in terms of its AI-related potential.the stock is Tesla (TSLA -1.76%) And this is why it is (still) a strong contender for buy and hold.
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Let me be clear: Tesla teeth AI company
If you ask the average person, most people who know about Tesla will tell you that Tesla is, first and foremost, a car manufacturer. About $5 of the $6 Tesla makes comes from selling electric vehicles (EVs), so they’re right about that. But that fact speaks to the current state of Tesla. What about the future? Amidst these predictions, Tesla’s AI pipeline looks far more promising.
Technologies like fully autonomous driving (FSD) and robo-taxis are still out of reach at this point. Despite CEO Elon Musk’s repeated assertions that the FSD is just around the corner, challenges remain. But once FSD goes live, it will completely change what it means to own a Tesla. Much like owning an iPhone wouldn’t be the same without the internet, owning a Tesla that can drive itself (and possibly generate revenue for its owners) would be a game-changer for the company. prize.
That possibility explains in part why Kathy Wood and her investment firm Ark Invest set a $2,000 price target for Tesla by 2028. Wood understands that each vehicle sold today is more than just income on Tesla’s income statement. This is another part of the final platform that will help Tesla generate significant revenue from future services related to her FSD or similar AI-supported services.
What’s more, the research and development (R&D) Tesla is currently putting into FSD could pay off in surprising ways. For example, Tesla recently signed deals with competitors such as: Universal motor and ford motor companyallowing owners of non-Tesla vehicles to purchase adapters and use Tesla’s existing (and vast) network of charging stations.
A similar process could roll out in a few years, with Tesla selling access to its FSD software to competitors in exchange for a fee. The company’s services division, which currently accounts for less than 10% of total revenue, would then become a much more important business.
Increased production leads to AI growth
To make Tesla’s AI plans a reality, the company will need more vehicles on the road. And it’s already happening.
Tesla recently announced second-quarter production numbers that beat analyst expectations. Vehicles delivered to owners were 480,000 for him, an increase of 85% from 259,000 in the same period last year. The figure was well above Wall Street’s consensus forecast of 445,000.
The increase in production means Tesla will have more of its own cars on the road in the next few years. So when (it is not) FSD will enable the company to deploy software updates to millions of vehicles at scale.
Admittedly, Tesla’s AI progress is imperfect, and regulatory challenges will emerge as the company approaches achieving FSD status. But EV makers should have science on their side.
Tesla claims its own research shows its autopilot technology is already statistically safer than human drivers.and recent On my trip to Italy, I thought that with the introduction of computer-assisted driving, many roads (I’m looking at you, Rome) would be safer and less confusing.
Eventually FSD will come true. Consider how traditional vehicle safety technologies such as seat belts, airbags, and cruise control have become commonplace today. As FSD moves from theory to practice, Tesla will add a strong AI business to its already strong EV business. And that’s why Tesla is one of the best AI stocks to buy and hold right now.
Jake Lerch has held positions at Ford Motor Company, Nvidia, and Tesla. The Motley Fool has positions at Nvidia and Tesla and recommends them. The Motley Fool recommends General Motors and recommends the following options: A January 2025 $25 long call to General Motors. The Motley Fool has a disclosure policy.
