Why Tesla Is Considered the Most Undervalued AI Stock
One experienced analyst describes Tesla as the "most undervalued AI name." Despite shares of Tesla (TSLA) hitting new all-time highs in 2025, even greater growth could be expected in 2026.
Growth Beyond Electric Vehicles
This anticipated growth is less about car manufacturing and more about Tesla's potential in artificial intelligence (AI), which might become the largest growth area in history.
Valuation Compared to Competitors
Tesla is widely known as an electric vehicle (EV) company, but its valuation reveals something unusual. Tesla’s shares are trading at nearly 17 times sales, while EV competitors like Rivian Automotive and Lucid Group trade between 3 and 7 times sales.
Reasons for Tesla’s High Valuation
- Tesla is an established EV manufacturer with global brand recognition.
- The company benefits from unmatched access to capital, reflected in its $1.4 trillion market capitalization.
- The EV industry is challenging, with at least 30 EV startups failing over the last decade.
- Bringing a new vehicle from design to production can take 10 to 20 years, especially for startups lacking manufacturing facilities.
- Launching an EV business with even one production model requires billions of dollars and continuous funding from financial markets.
One veteran analyst believes Tesla is the "most undervalued AI name."
Tesla's strong market position and capital resources offer it a significant advantage over less established EV startups.
Author’s Summary
Tesla’s soaring valuation is driven less by its electric vehicles and more by its unique position to capitalize on the booming artificial intelligence sector.
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