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A “battle royale” is going on for the crown of the world’s biggest company, as Nvidia (NVDA), Apple (AAPL), and Microsoft (MSFT) all jostle for the title that had largely stayed with the iPhone maker between 2011 and 2023.
Not to be left behind is Tesla (TSLA), whose mercurial CEO Elon Musk believes that Tesla could be worth more than $30 trillion by some unspecified date in the future. Could Musk, who previously said that Tesla could become the world’s biggest company, with a market cap in excess of the combined value of Apple and Saudi Aramco, make the electric vehicle (EV) giant a bigger company than Nvidia? We’ll explore this in this article.
To begin with, both Tesla and Nvidia are artificial intelligence (AI) plays led by visionary leaders. Musk, however, is a lot more flamboyant with his claims, and has proclaimed himself “pathologically optimistic” – an assertion he made at the 2024 annual meeting, where shareholders approved his mammoth $45 billion compensation package.
Elon Musk Expects Optimus to Add $25 Trillion to Tesla’s Market Cap
At the shareholder meeting earlier this month, Musk said that the company’s Optimus humanoid could add $25 trillion to Tesla’s market cap. To be sure, this is not the first time that Musk – whose compensation is tied, among other metrics, to Tesla’s market cap – has made bold claims about Tesla’s stock price or business forecast.
He famously (or infamously) touted 1 million robotaxis by 2020. Still, Tesla is set to finally unveil the product only on Aug. 8.
Musk also predicted that Tesla’s vehicle production would rise at a CAGR of 50% and hit 20 million units by 2030. The company has since virtually conceded that growing deliveries at that pace is not possible after missing the mark for 2 consecutive years.
In 2022, Musk said that Tesla could be valued at more than the combined market caps of Apple and Saudi Aramco, as he positioned the company as an energy and tech giant. As for Musk’s assertions on Tesla achieving full autonomy – which he said was the key driver of the company’s valuation (before the AI pivot) – the less said, the better.
For the last several years, including in 2023, Musk promised full autonomy “by the end of the year” - but its full self-driving (FSD) remains far from fully autonomous. In 2020, Musk said that FSD would cost $100,000 one day. While the company gradually lifted the price to $15,000, it has since been cut by nearly half to $8,000 to boost “adoption.”
Tesla Bulls Expect It to Become the Biggest Company
While a section of the market scoffs at Musk’s claims of its market cap surpassing $30 trillion, many Tesla bulls expect it to become the world’s biggest company eventually. Last year, Morgan Stanley analyst Adam Jonas, a long-standing Tesla stock bull, created quite a furor when he said that the company’s Dojo supercomputer could add $600 billion to Tesla’s market cap - which, for context, is higher than the company's current market cap.
Cathie Wood of ARK Invest – who Musk has said has a better understanding of Tesla's business – believes the company is the “biggest AI project” globally. Earlier this month, ARK Invest revised its Tesla target price to $2,600, which it expects to be hit by 2029. The firm’s bear case and bull case target prices are $2,000 and $3,100, respectively.
Even the bear case target price is over 10x the current price levels, and would imply Tesla’s market cap rising to $6 trillion - which is roughly double Nvidia's current market cap.
TSLA Was Once More Valuable Than NVDA
While the prospect of Tesla’s market cap surpassing that of Nvidia might sound borderline outrageous for now, the Elon Musk-run company was more valuable than Nvidia for over two years before Nvidia surpassed its market cap in January 2023. Since then, Nvidia hasn’t looked back, and the divergence between the two has grown even starker since May 2023, when Nvidia reported its fiscal Q1 2024 earnings.
The Jensen Huang-led company subsequently became a $1 trillion company, and soon became a $2 trillion and then a $3 trillion behemoth. As for Tesla, the company’s market cap peaked at above $1.2 trillion in late 2021, and has since never surpassed $1 trillion.
Can Tesla Become the World’s Biggest Company?
While Tesla has plans to become an AI powerhouse, markets will have to wait for the company to show some visible results on that front. TSLA became a $1 trillion company in 2021 only because it showed promise of stellar delivery growth and strong margins. Since then, the company’s operating margins have dipped to mid-single digits, which is way below the double-digit industry-beating margins that it once boasted.
As for delivery growth, far from the 50% CAGR that Musk once touted, markets are now debating whether the company will be able to report YoY growth in deliveries this year after the fall in its Q1 shipments.
Musk’s mega announcements of late haven’t been as market-moving as they have been in the past, and Tesla will need to show results on the ground before it becomes a $1 trillion giant again, let alone becoming the world’s largest company.
All said, despite Musk’s threats to leave Tesla if his compensation wasn’t approved, and his in some way competing with the company with his own AI startup, it would be foolhardy to say that Tesla can never become the biggest company globally under his leadership. If selling AI chips can make Nvidia a $3 trillion giant, Tesla also has a shot at the top if it can successfully commercialize the technology with its humanoid, supercomputer, autonomous driving, and robotaxis.
On the date of publication, Mohit Oberoi had a position in: TSLA , NVDA , MSFT , AAPL . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
