1) Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
Tesla, Inc. (NASDAQ:TSLA) is involved in the EV battery business throughout multiple areas – from in-house battery production to raw material sourcing, recycling and energy storage solutions. The company’s vertical integration goes over and above manufacturing, and includes R&D, allowing it to maintain a competitive advantage. Its intangible assets and cost advantage are expected to act as key competitive advantages. Tesla, Inc. (NASDAQ:TSLA) is facing constraints in battery production and it continues to actively work to increase total gigawatt hours of battery production in 2025.
The outlook for the company’s battery business is optimistic, courtesy of its focus on innovation, production scaling, and expanding demand for EVs and energy storage solutions. Tesla, Inc. (NASDAQ:TSLA) is expected to see strong growth in battery sales as it powers the dynamic fleet of EVs, including Model 3, Model Y, Cybertruck and Semi. The company’s 4680 battery cell production can act as a critical growth driver for battery growth. These cells are anticipated to reduce production costs and increase vehicle range and charging speed.
In 2024, Tesla, Inc. (NASDAQ:TSLA) made significant investments in infrastructure, which can fuel the next wave of growth. These include vehicle manufacturing capabilities for new models, AI training compute, and energy storage manufacturing capacity. With the acceleration of EV adoption, the company is well-placed to benefit from increased demand, cost improvements, and new revenue lines which are associated with its leadership in battery technology and manufacturing. Tsai Capital, an investment management company, released its Q4 investor letter. Here is what the fund said:
“Tesla, Inc. (NASDAQ:TSLA) (TSLA—Year of First Purchase: 2020) We’ve owned Tesla since February 2020 and initially paid an average of about $41.66 per share5 . Tesla is a leading AI company that has formidable competitive advantages across various sectors, including electric vehicles, software, and energy storage.
A true outlier, Tesla operates in an entirely unconventional way, often creating market confusion and attracting criticism from short sellers and from those who mistake the company for what it is fundamentally not—a traditional car manufacturer.
Under the visionary leadership of Elon Musk, Tesla has adopted a scale-economies-shared business model, deliberately lowering prices, enhancing the customer value proposition, driving adoption, and expanding the total addressable market…” (Click here to read the full text)
While we acknowledge the potential of TSLA as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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