TLDR
- Wedbush Securities analyst Dan Ives calls Tesla the most undervalued AI name in the market.
- Tesla stock trades at nearly 17 times sales compared to competitors at 3 to 7 times sales.
- Ives issued a strong buy recommendation based on Tesla’s physical AI technology advantage.
- The robotaxi market could reach $10 trillion according to investor Cathie Wood.
- Tesla expanded its Austin robotaxi coverage in three weeks versus Waymo’s seven-year gradual expansion.
Tesla stock has surged to record highs in 2025. Wedbush Securities analyst Dan Ives now calls the electric vehicle maker “the most undervalued AI name” in the market. The company’s valuation reaches $1.4 trillion as investors bet on its autonomous vehicle technology rather than traditional car sales.
Physical AI Technology Drives Valuation Premium
Tesla stock trades at nearly 17 times sales. This valuation far exceeds competitors Rivian Automotive and Lucid Group, which trade between 3 to 7 times sales. The gap reflects Tesla’s unique position, as Ives describes it, as a “physical-AI play.”
The company has invested heavily in AI-powered autonomous driving technology. Tesla employs a vision-only approach, utilizing limited sensors in conjunction with advanced AI algorithms. This strategy differs from competitors who rely on expensive lidar and infrared camera systems.
Ives issued a strong buy recommendation for Tesla stock, citing this AI advantage. The analyst believes the technology could generate over $1 trillion in additional value. Tesla’s scale and manufacturing capabilities position it to dominate the emerging robotaxi market.
Robotaxi Market Expansion Plans for 2026
Tesla launched its robotaxi service with limited availability in Austin, Texas. The company expanded coverage in the city within three weeks of initial deployment. ARK Invest reports Tesla achieved broader Austin coverage than Waymo accomplished in seven years of gradual expansion.
CEO Elon Musk predicts the service will expand to 10 new cities by year end. However, Waymo currently operates more autonomous rides without human supervision. ARK Invest, which holds substantial Tesla stock positions, projects the company will lead the robotaxi sector.
The robotaxi market could reach $10 trillion according to investor Cathie Wood. Tesla aims to scale quickly using its end-to-end AI system. The company plans to manufacture its own autonomous vehicles rather than partnering with existing manufacturers.
Tesla Stock Rises on AI Investment Strength
Tesla stock benefits from the company’s proven manufacturing infrastructure. More than 30 EV startups failed over the past decade. New vehicle development typically requires 10 to 20 years from design to production.
Starting an EV business with one model demands billions in capital. These ventures need continuous funding for years before generating returns. Tesla’s established operations and $1.4 trillion market cap eliminate this risk.
The company possesses worldwide brand recognition and unmatched access to capital markets. This advantage allows Tesla to invest heavily in AI development. Smaller competitors lack the resources to match Tesla’s investments in autonomous vehicles.
Tesla began investing in AI technology over a decade ago. The company developed its own AI chips and neural networks. These systems process real-time data from vehicle cameras to enable autonomous navigation.
Traditional autonomous vehicle sensors have proven to be costly and unreliable. AI technology allows fewer sensors to interpret complex driving environments. Tesla’s approach reduces hardware costs while improving performance.
The vision-only system utilizes standard cameras, similar to the human eye. Machine learning algorithms train on billions of miles of driving data. This method differs from sensor-heavy approaches used by most competitors.
Early 2026 Earnings Could Show Progress
Tesla stock investors await the company’s first quarter 2026 earnings report. The call could reveal substantial robotaxi division growth. Quarterly updates this year provided limited tangible progress metrics.
Expansion into multiple cities would validate Tesla’s rapid scaling strategy. The company aims to demonstrate superiority over Waymo’s gradual approach. Success could justify Tesla stock’s premium valuation relative to traditional automakers.
Musk’s predictions often exceed actual results. Nevertheless, any meaningful expansion of robotaxis would support the current market capitalization. Tesla stock trades on the future potential of AI rather than current vehicle sales.
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