Reason Tesla Stock Is Called the Most Undervalued AI Name
One veteran analyst regards Tesla as the "most undervalued AI name." Despite shares of Tesla (TSLA) reaching record highs in 2025, even greater growth is anticipated in 2026.
Growth Beyond Electric Vehicles
This growth potential is less about car manufacturing and more about what may become the biggest growth opportunity in history: artificial intelligence (AI).
Valuation Compared to Competitors
While Tesla is typically seen as an electric vehicle (EV) stock, its valuation stands out. Tesla shares trade at nearly 17 times sales, whereas EV peers like Rivian Automotive and Lucid Group trade between 3 to 7 times sales.
Reasons for Valuation Gap
- Tesla is a proven EV maker with global recognition.
- It has unmatched access to capital, supported by a $1.4 trillion market cap.
- The EV industry is challenging, with at least 30 startups failing over the past decade.
- Developing a new EV model typically takes 10 to 20 years, especially without existing manufacturing infrastructure.
- Launching an EV business with a single model costs billions of dollars and requires continuous financial support.
"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."
Overall, Tesla's valuation reflects not only its automotive success but also its strategic position in AI innovation.
Author's summary: Tesla's stock is highly valued for its strong EV foundation and immense AI potential, setting it apart from competitors with lower valuations.