1 Reason Tesla Stock Is Called a

1 Reason Tesla Stock Is Called a Top AI Opportunity

One veteran analyst considers Tesla (TSLA 2.85%) the most undervalued name in artificial intelligence (AI). While Tesla is commonly known as an electric vehicle (EV) maker, its stock’s rapid rise to new all-time highs this year points to potential growth beyond car manufacturing, especially in AI.

Valuation Discrepancies in the EV Sector

Tesla trades at nearly 17 times its sales, a much higher multiple compared to EV competitors like Rivian Automotive and Lucid Group, which trade between 3 to 7 times sales. Two key reasons explain this valuation gap.

Proven Track Record: Tesla has established itself as a trustworthy EV manufacturer with a global brand and unmatched capital access, boasting a market cap of $1.4 trillion.
Industry Challenges: The EV sector is fraught with financial struggles. Over the past decade, at least 30 EV startups have failed due to the heavy costs and long timelines—10 to 20 years—to bring a vehicle from concept to production.

Barriers for New Entrants

Starting an EV business demands billions of dollars and requires a production-ready vehicle. New companies without existing manufacturing infrastructure must continuously raise funds, which makes survival difficult.

One veteran analyst believes Tesla is the "most undervalued AI name."

This highlights Tesla’s advantage beyond its vehicle business, as its AI potential could become one of the largest growth opportunities in history.

Author's summary: Tesla's stock surge is driven less by car sales and more by its emerging dominance in AI, setting it apart from typical EV competitors amid industry challenges.

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The Motley Fool — 2025-11-04