We recently published a list of 10 AI Stocks to Watch Amid DeepSeek Impact. In this article, we are going to take a look at where Tesla Inc (NASDAQ:TSLA) stands against other AI stocks to watch amid DeepSeek impact.
The launch of DeepSeek is drawing new battle lines in the AI competition and many analysts believe the technology investment landscape won’t be the same again after the Chinese breakthrough. Talking to CNBC, Databricks CEO Ali Ghodsi said that DeepSeek would result in “distillation” where companies will make smaller, more efficient models based on the technology:
“So we’re going to just see distillation happening left and right. It’s already happening—like, there’s so many versions of DeepSeek that have been reproduced and redone just in the last week as we speak. So this distillation is going to just create so much competition at the LLM or the AI layer.”
In the coming days, it would be interesting to see how American AI companies tackle this challenge and come up with new products or breakthroughs to maintain their dominance.
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For this article, we picked 10 AI stocks that are trending on the back of latest news. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Tesla Inc (NASDAQ:TSLA)
Number of Hedge Fund Investors: 99
Seth Goldstein from Morningstar said in a latest program on Schwab Network that Tesla Inc (NASDAQ:TSLA) shares are priced for perfection even after the pullback from the stock’s 52-week high.
“There’s still a lot of positive scenarios that are priced into shares with regards to vehicle delivery growth in 2025 and beyond, from the new, more affordable vehicle that’s set to launch and from the success of self-driving, ultimately translating to Robo-taxis by a management timeline. And I think both of those are realistic. So, I think there’s still a lot of optimism priced in the current stock.”
The analyst was asked what would be the fair value of Tesla Inc (NASDAQ:TSLA) shares. Here is what he said:
“My fair value is 210, so I see a pretty significant decline from the current levels around 390 to get back down to 210. But, you know, I think that once management comes in with their first and second-quarter production and delivery numbers, we’re likely to see that. 20 to 30% seems a little optimistic, which is what Elon Musk was guiding to with the last earnings call. So, I don’t think 2025 is going to see the growth that management guided to. I think that will have some negative market sentiment.”
Analysts are still trying to look beyond Elon Musk’s claims and find out the specifics on the company’s EV and robo-taxi plans.
Tesla Inc’s (NASDAQ:TSLA) product lineup is showing signs of stagnation, with over 95% of sales still coming from the Model 3 and Model Y. Meanwhile, competitors are rolling out more advanced models. According to Reuters, Tesla’s market share in Europe is slipping as legacy automakers like BMW post stronger sales. Chinese competitor BYD is also gaining ground in Europe, despite talk of tariffs.
Infuse Asset Management stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q4 2024 investor letter:
“I’ve been very patient with Tesla, Inc. (NASDAQ:TSLA). Frankly, I’m a big believer in Elon but I also hate investing in companies where the narrative far outweighs any financial evidence. I do see a path to Tesla being one of the world’s largest companies but slight growth in a cyclical industry with very little pricing power is not a recipe for strong forward returns. Though the AI/robotics narrative is strong, I’m not adding at current prices since we haven’t seen much of the narrative translate into the earnings yet. This cognitive dissonance can be an uncomfortable tension but I’m trying to look at the big picture here. So while I fully admit that Tesla may be overvalued in the short run, the long-term destination of the company should not be underestimated.”
Overall, TSLA ranks 5th on our list of AI stocks to watch amid DeepSeek impact. While we acknowledge the potential of TSLA, our conviction lies in the belief that under the radar 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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Disclosure: None. This article is originally published at Insider Monkey.