1 Reason Tesla Stock Is Called a
One veteran analyst considers Tesla the "most undervalued AI name." Tesla (TSLA 4.42%) shares have surged to new all-time highs this year, with further growth expected in 2026.
This growth potential is driven not by car manufacturing but by what may become the largest growth opportunity in history: artificial intelligence (AI).
Tesla’s Unique Valuation
Although Tesla is mainly seen as an electric vehicle (EV) stock, its valuation is unusually high. Tesla shares trade at nearly 17 times sales, while EV competitors like Rivian Automotive and Lucid Group trade between 3 and 7 times sales.
Reasons for the Valuation Gap
- Tesla is a proven EV manufacturer with global name recognition and unmatched access to capital, supported by its $1.4 trillion market cap.
- The EV industry faces many financial failures; over the past decade, at least 30 EV startups have failed.
- Developing a new vehicle model can take 10 to 20 years, especially for startups lacking manufacturing infrastructure.
- Starting an EV company with a single model requires billions of dollars and continuous fundraising.
"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."
Tesla’s strong position and financial stability set it apart from its competitors and underpin its high valuation.
Author’s Summary
Tesla’s high valuation reflects its proven EV success and the immense growth potential from its expansion into AI, beyond traditional car manufacturing.