When it comes to electric vehicles (EVs), Tesla (TSLA) might be the first name that springs to mind, but Toyota (TM) is proving it deserves a spot in the conversation. The Japanese automaker, a dominant force in gas-powered cars for nearly a century, has been making rapid strides to diversify its business. From pioneering hybrids with the iconic Prius to its foray into EVs and autonomous vehicles (AVs), Toyota is quietly positioning itself as a key player in the future of mobility.
However, it wasn’t Toyota’s EV advancements that stole the spotlight at CES 2025, one of the most influential tech events of the year. At CES 2025, held earlier this month, Toyota grabbed investors’ attention with a groundbreaking announcement. The company showcased its deepening partnership with none other than Nvidia (NVDA), the undisputed leader in artificial intelligence (AI) and chip technology.
Each year at CES, Nvidia showcases its growing influence across the mobility sector, partnering with automakers, suppliers, and transportation leaders. And In 2025, a shining example of this trend was its partnership with Toyota. Toyota and Nvidia’s long-standing collaboration reached an exciting new milestone with their latest announcement at CES 2025. Building on years of joint innovation, the duo unveiled plans to equip Toyota’s next-generation vehicles with new capabilities powered by Nvidia’s Drive AGX Orin supercomputer.
This advanced platform, paired with Nvidia’s DriveOS operating system, will power Toyota’s automated driving capabilities, setting a new benchmark for smart mobility. With this bold move, Toyota has positioned itself as a serious contender in the race for autonomous vehicle dominance, leaving investors buzzing. So, given this exciting development, should investors scoop up the shares of this legacy automaker now?
About Toyota Motor Stock
Toyota Motor (TM) stands as a global powerhouse in the automotive industry, renowned for its leadership in sales and production. With a versatile product lineup that spans passenger cars, minivans, trucks, and a wide array of related parts and accessories, Toyota caters to diverse customer needs. Beyond its foothold in combustion-engine vehicles, the company is at the forefront of innovation, advancing fuel cell technology and automated driving systems.
Toyota’s Automotive division serves a vast domestic and international market, including North America, Europe, Asia, and the Middle East, cementing its status as a global leader. Valued at a market capitalization of around $243mbillion, this automotive giant has weathered a 7.4% dip in its share price over the past year. However, the stock has shown resilience, rebounding with a 9.8% gain in the last three months.
The company takes pride in rewarding its shareholders with semiannual dividends, reflecting its commitment to sharing success. With a yield of 2.88%, it may be a compelling option for income-focused investors seeking rewarding returns.
Beyond its commitment to shareholder value and an enticing dividend yield, the stock stands out as a bargain in the auto industry compared to some of its peers. Trading at 9.08 times forward earnings and 0.78 times sales, TM offers a compelling value proposition, especially when compared to EV king Tesla's lofty valuations of 149.79 times forward earnings and 15.33 times sales.
A Closer Look At Toyota Motor’s Q2 Performance
In early November, Toyota unveiled its fiscal 2025 Q2 earnings report, showing a mixed financial performance. While the automaker saw a slight year-over-year increase in revenue, reaching 11.4 trillion Japanese yen ($73.2 billion), its net income painted a much less favorable picture. At 573.7 billion yen ($3.7 billion), net income plummeted by 55.1% compared to the same quarter last year.
Adding to the concerns, the Japanese automaker posted its first quarterly decline in operating profit in nearly two years, with a 19.6% drop year-over-year, reaching 1.16 trillion yen ($7.7 billion). This setback underscores the pressures the company faces as it adapts to the fast-paced transition toward EVs.
However, on a positive note, Toyota remains financially strong, reporting a cash reserve of 7.6 trillion yen ($48.8 billion) as of Sept. 30, highlighting its robust liquidity and ability to weather the challenges ahead. Looking forward to fiscal 2025, management anticipates total retail vehicle sales of 10.85 million units, slightly down from the 11.09 million units achieved in fiscal 2024.
Despite the anticipated dip in volume, the automaker expects sales revenue to climb to 46 trillion yen ($295.2 billion), surpassing the 45 trillion yen ($288.8 billion) recorded in the prior year, signaling confidence in its pricing power and product mix. On the other hand, operating income for the entire year is projected to contract by 18.8% year over year to 4.3 trillion yen ($27.6 billion).
What Do Analysts Expect for Toyota Motor Stock?
Nevertheless, despite the mixed Q2 performance, Wall Street remains optimistic about TM stock, with a consensus “Moderate Buy” rating overall. Of the eight analysts offering recommendations, five advise a “Strong Buy” and the remaining three suggest a “Hold.” Plus, the average analyst price target of $236.80 indicates 31% potential upside from the current price levels.
