Tesla Has a $1 Trillion Opportunity in AI and Self-Driving, And the "First Buddy" Relationship Between Musk and Trump Could Fast-Track It
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Wedbush analyst Dan Ives' published his latest bullish note on the EV maker on Friday, predicting that the artificial intelligence and autonomous driving opportunity will be worth $1 trillion for the company over time.
Tesla Inc.'s stock rose 2.9% Monday morning trading.
Tesla Chief Executive Elon Musk's relationship with President-elect Donald Trump and "significant influence" in Trump's White House are already having a big impact on Tesla $(TSLA)$, Ives wrote in a note to clients.
As Trump gears up to aggressively tackle the AI/autonomous path, the next step is a formal federal framework for fully self-driving vehicles as a key priority for the U.S. Transportation Department.
"This would be a huge step forward in easing U.S. rules for self driving cars and be a significant tailwind for Tesla's autonomous and AI vision heading into 2025," he wrote.
Wedbush has an outperform rating on Tesla's stock and a $400 stock price target that's the highest on Wall Street. (One other research team, Global Equities Research, also has a $400 price target for Tesla.)
Another plan mooted by the Trump administration, the creation of an AI Czar, as reported by Axios this week, would further help drive key initiatives for the tech world that would benefit Tesla, said Ives.
"We estimate the AI and autonomous opportunity is worth $1 trillion alone for Tesla and we fully expect under a Trump White House these key initiatives will now get fast tracked as the federal regulatory spiderweb that Musk & Co. have encountered over the past few years around FSD/autonomous clears significantly under a new Trump era," the analyst wrote.
Tesla currently has a market valuation of just over $1 trillion, and the next $1 trillion will start to be unlocked over the next 12 to 18 months, said Ives.
Tesla was never just a car company, but rather a leading disruptive tech player "and the first part of this grand strategic vision has taken shape over the past five years," said the note. The company is still the most undervalued AI play in the market but with Trump's help, it can reap the benefits.
Trump's presidency will likely be negative overall for the EV space if EV tax credits are pulled as expected. But it will be a positive for Tesla, said Ives.
"Tesla has the scale and scope that is unmatched in the EV industry and this dynamic will give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment starting in 2025," he wrote.
Tesla's stock has gained 43% in the year to date, while the S&P 500 SPX has gained 26%.
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