We recently published a list of Top 10 Trending Stocks as AI Hype Fades. In this article, we are going to take a look at where Tesla, Inc. (NASDAQ:TSLA) stands against other top trending stocks as AI hype fades.
The US stock market took a major hit recently due to tariff-related uncertainties and a broader concern about AI stock valuations. Jeff Sonnenfeld, Yale School of Management senior associate dean for leadership studies, recently talked about the latest data showing a decline in CEO sentiment amid President Donald Trump’s tariff policies.
“We’re seeing with the CEO community, it’s not just the report you had this morning on the plunge in retail sentiment, the plunge in consumer sentiment, and CEO confidence indices by other indices such as Chief Executive Magazine. But we had 100 CEOs across sectors, 60% Republican, about 30% Democrat, 10% independent, and they were overwhelmingly discouraged. There’s a lot of goodwill that had been accumulated after the election. Even though most large CEOs didn’t support President Trump, they did rally and were encouraged to go down to Mar-a-Lago to talk about company-specific issues. The same thing happened in 2017. That goodwill dissipates quickly, and it’s happening right now. 85% think these tariff moves are a disaster, even though they’re in favor of tariffs. They want selective tariffs.”
With tariff deadlines fast approaching, it would be interesting to see how the market reacts to potential changes in President Trump’s policies and stance.
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For this article, we picked 10 stocks Wall Street analysts were discussing lately. With each company 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Funds Investors: 99
Gene Munster, Deepwater Asset Management managing partner, said in a latest program on CNBC that Tesla, Inc. (NASDAQ:TSLA) fundamentals are “deteriorating” and he would be a seller of the stock in the very short-term investment horizon. However, the analyst believes the stock is set for gains in 2026 amid electrification and robotics.
“I’m a believer in where this company is going. I want to start there but just focus on the fundamentals because investing in Tesla over the last seven years has had two phases to it. One is the momentum that is either all investors’ focus, or second, fundamentals. And to answer your question, the investors are focused on fundamentals right now, and the fundamentals are deteriorating. To put it in perspective, I think that this year is going to be down from last year, both in terms of deliveries and earnings. The street back on January 31st was looking for 308 in earnings for calendar 25; that’s drifted down to 285. I think the real number is 220. At 220, it’s still 100 times earnings, and so that’s the fundamental. I think that’s the vortex that the stock is going to focus on until they report their deliveries. I think that is going to be a disappointing number relative to expectations.”
Wall Street is finally realizing that President Trump cannot solve Tesla’s core problems. Tesla’s sales are falling all over the world despite the broader industry growth. For example, in California, the largest U.S. market for electric vehicle adoption and sales, Tesla sales fell about 12% year over year in 2024, causing its market share to drop from 60.1% in 2023 to 52.5% in 2024. Was it because Californians are buying fewer EVs? No. Californians purchased more than 2 million electric cars during the year, almost double when compared to the past two years.
Polen Focus Growth Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q4 2024 investor letter:
“The largest relative detractors in the quarter were Tesla, Inc. (NASDAQ:TSLA) (not owned), Thermo Fisher Scientific, and Broadcom (not owned). We’ve spoken at length about our rationale for not owning Tesla. The stock enjoyed a 54% return during the quarter, with effectively all of the share price performance strength coming in the post-election period, as the market expressed a positive view on Elon Musk’s prominent role in the incoming Trump administration and its potential implications for Tesla. While we agree this development should be a net positive for Tesla and recognize the company’s interesting future prospects for autonomous driving and humanoid robots, its current valuation demands that shareholders pay primarily for potential innovations that have yet to materialize, with uncertain risks and timelines, presenting a different type of risk profile than we are comfortable with. Today, Tesla is an automobile manufacturer limited to the higher-income segment and is increasingly challenged to sell vehicles when interest rates are not zero. As such, we continue to question the company’s long-term growth profile, its ability to scale a large robotaxi service (which seems to be the source of euphoria in Tesla shares), and its corporate governance.”
Overall, TSLA ranks 6th on our list of top trending stocks as AI hype fades. 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 time frame. 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.
