1 Reason Tesla Stock Is Called a
One veteran analyst considers Tesla the "most undervalued AI name." Tesla shares (TSLA 4.40%) have surged to record highs this year, with even greater potential growth expected in 2026. This anticipated expansion is driven less by car manufacturing and more by what might become the largest growth opportunity in history: artificial intelligence (AI).
Though Tesla is commonly seen as an electric vehicle (EV) company, its valuation stands out. Tesla's shares trade at nearly 17 times sales, while competitors like Rivian Automotive and Lucid Group trade between 3 to 7 times sales.
Reasons Behind Tesla’s Valuation
- Proven EV Manufacturer: Tesla has global name recognition and unparalleled access to capital, supported by its $1.4 trillion market cap.
- Industry Stability: Tesla's established position matters in an industry marked by financial failures; more than 30 EV start-ups have collapsed in the past decade.
- High Barriers to Entry: Developing a new vehicle from design to production can take 10 to 20 years, especially for start-ups lacking manufacturing infrastructure.
- Financial Demand: Launching an EV business with just one model in production requires billions of dollars and ongoing access to financial markets.
"It can take 10 to 20 years to bring a new vehicle from design to production, especially if the start-up in question has no existing manufacturing infrastructure."
Ultimately, Tesla's valuation reflects both its enduring industry leadership and its promising role in the emerging AI sector.
Author's summary: Tesla's stock valuation is driven not only by its established EV dominance but also by its position as a highly promising AI investment.