1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 85
Tesla, Inc. (NASDAQ:TSLA) has been all about excitement over the past few years, following its rise in the EV market and then facing severe competition from Chinese competitors. However, Tesla is trying to make a comeback as it seems to be one of the most promising growth stocks according to the hedge funds, as it bets on AI and robotics. Even though the company makes the majority of its revenues in selling electric vehicles, it also operates a lucrative energy storage business that promises to generate long-term value. Now, with the launch of robotaxis, it can be a game changer for Tesla, according to Dan Ives, Wedbush Securities managing director.
Analysts have had a mixed take on Tesla’s robotaxis. During an earnings call in 2019, Elon Musk promised to put a fleet of one million robotaxis on the road in 2020. Five years later, Musk finally revealed its robotaxis along with a Robovan and Tesla bot. According to RBC Capital Markets global autos analyst, Tom Narayan, Tesla’s robotaxis could generate over $1.7 trillion in revenue by 2040. CNBC’s Jim Cramer was not pleased at all after Tesla’s Robotaxi unveiling. While impressed by the concept of the Cybercab, Cramer said the event’s demonstration lacked substance and failed to prove its technological prowess.
Tesla seems to struggle as an EV company and is focusing on diversifying its revenue base. However, it remains a promising robotics stock after its recent launch event.
ClearBridge Small Cap Value Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q2 2024 investor letter:
“Tesla, Inc. (NASDAQ:TSLA) manufactures electric vehicles, related software and components, and solar and energy storage products. The stock contributed as Tesla continued to drive vehicle manufacturing costs lower, accelerate the launch of new models, and invest heavily in its lucrative AI initiatives. Shareholders reaffirmed the CEO’s compensation plan, alleviating personnel and legal uncertainties. Despite material operational complexities resulting in significant shutdowns of key manufacturing facilities and lower sales volume, Tesla presented better-than-expected margins in the quarter. It expects to launch a lower-cost model as soon as late 2024, which should result in accelerated revenue growth, reduced manufacturing costs, and increased factory utilization. The company continued to advance its autonomous driving capabilities, expanding its already significant data centers and developing its humanoid robot Optimus. These investments increased confidence in the attractive growth opportunities that remain ahead.”
While we acknowledge the potential of TSLA to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an 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.
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