/An%20image%20of%20a%20Tesla%20humanoid%20robot%20in%20front%20of%20the%20company%20logo%20Around%20the%20World%20Photos%20via%20Shutterstock.jpg)
Tesla (TSLA) CEO Elon Musk recently got a ringing endorsement from Commerce Secretary Howard Lutnick, who urged investors to buy the dip in the company’s stock. In an interview with Fox News, Lutnick said, “If you want to learn something on this show tonight, buy Tesla. It’s unbelievable that this guy’s stock is this cheap. It will never be this cheap again when people understand the things he is building.”
With the stock down 31% on a YTD basis, the risk-reward balance may have finally turned favorable, especially for long-term investors.
About Tesla Stock
One of the most consequential companies of the 21st century, Tesla is a leader in the global electric vehicle (EV) market with an increasing focus on artificial intelligence (AI), humanoid robots and energy storage solutions. The company currently commands a market cap of about $800 billion.
Helmed by Elon Musk, Tesla shares have been a bonafide wealth creator for its investors, surging by 625% over the past five years.
Despite falling short of revenue and earnings expectations in the latest quarter, Tesla still posted growth. The company’s revenue rose by 2% year-over-year to $25.71 billion, while earnings climbed by 3% to $0.73 per share, missing the consensus estimate of $0.75.
Although the decline in vehicle deliveries was seen as a setback, several other key performance indicators showed encouraging growth. Tesla reported year-over-year increases of 17% in charging stations and 19% in connectors, bringing the totals to 6,975 and 65,495, respectively.
Net cash generated from operating activities reached $4.8 billion, exceeding the previous year’s $4.4 billion, despite a slight dip in free cash flow to $2.03 billion. By the end of the year, Tesla held a robust cash balance of $36.6 billion, comfortably surpassing its short-term debt of $14.9 billion.
Now, coming back to Lutnick’s comments, are the “things” that Musk is “building” exciting enough to warrant an investment in the stock at the current juncture? Let’s have a closer look.
Dojo Supercomputer
Morgan Stanley is of the opinion that Tesla’s Dojo Supercomputer can propel the company’s value higher by a sizeable $500 billion. As I highlighted previously, the Dojo Supercomputer is Tesla’s custom-built AI training supercomputer, designed to process vast amounts of video data for autonomous driving. It plays a critical role in training Tesla’s Full Self-Driving (FSD) system by analyzing real-world driving scenarios.
Dojo, which has been in the works since 2019, was unveiled finally during Tesla’s AI Day in 2021. Tesla’s Dojo supercomputer capitalizes on an extensive collection of real-world driving data gathered from its global fleet to enhance the efficiency and safety of its Full Self-Driving (FSD) technology. Beyond refining autonomous driving capabilities, the vast datasets processed by Dojo serve a pivotal role in advancing Tesla’s Optimus humanoid robotics project, further underscoring the company’s push into cutting-edge artificial intelligence and automation.
Optimus
Musk forecasts that Tesla’s humanoid robot Optimus has a revenue potential surpassing $10 trillion — an outlook that underscores the sheer scale of the opportunity ahead. I have covered Optimus here, noting that “Optimus is designed to integrate seamlessly into existing workflows without requiring major overhauls.”
Moreover, Musk has projected that once Tesla’s annual production of Optimus robots surpasses 1 million units, the cost per unit is expected to fall below $20,000. The company intends to introduce several thousand units this year, with production scaling up significantly in the subsequent period. In the initial phase, these robots will be integrated into Tesla’s own operations, enhancing efficiency across multiple departments and streamlining various internal processes.
Additionally, an updated version of Optimus bots is expected to be unveiled later this year, which is said to include undisclosed upgraded capabilities.
Energy Storage
Tesla’s burgeoning energy business is another vital cog in its flywheel.
As stated in this earlier piece of mine, Tesla is steadily broadening its global footprint in energy operations, with a strong emphasis on solar solutions and the deployment of Megapack systems. To drive this expansion, the company has established new manufacturing facilities in Shanghai and Texas.
The Texas plant notably features a 50,000-GPU compute cluster designed to lower operational costs and reduce reliance on external computing services. This proprietary infrastructure is set to accelerate the progress of Tesla’s Full Self-Driving (FSD) technology, support the development of its Optimus humanoid robot, and further enhance the integration of its hardware and software ecosystem.
Vehicles
And now comes the biggest revenue generator for the company, its autonomous vehicles.
The company’s market dominance, along with the introduction of new models such as the refreshed Model Y, is expected to fuel growth in sales, deliveries, and profitability. Notably, Tesla announced in March that it had secured 200,000 orders for the updated Model Y in China. This surge in demand stands out as a positive development amid slowing sales in the world’s second-largest economy, where increased competition and tariff challenges have weighed on the broader automotive market.
In response to shifting market conditions, Tesla is actively pursuing cost reductions to make its vehicles more affordable. The company’s Shanghai team is already working on a revised version of the popular Model Y SUV, aiming to reduce production expenses by 20% to 30%. This cost-cutting initiative is expected to enable Tesla to offer a more competitively priced vehicle that can better challenge cheaper electric alternatives offered by Chinese automakers. As part of its strategy to boost adoption, Tesla is also providing a one-month free trial of its Full Self-Driving (FSD) technology in the region.
With these strategic moves and the absence of comparable electric vehicle alternatives in the U.S. market, Tesla is well-positioned to maintain its leadership in the EV industry for the foreseeable future.
Analyst Opinions on TSLA Stock
Overall, analysts have deemed the stock a “Hold” with a mean target price of $338.94 which indicates upside potential of about 21% from current levels. Out of 40 analysts covering the stock, 15 have a “Strong Buy” rating, three have a “Moderate Buy” rating, 12 have a “Hold” rating and 10 have a “Strong Sell” rating.
