Could Tesla Be the World's Most Valuable Company in 10 to 15 Years?

While Apple (NASDAQ: AAPL) currently holds the reigning title of the world's most valuable company with a market capitalization of nearly $2.7 trillion, could a company like Tesla (TSLA 4.30%) eventually catch up to the tech giant? In this segment of Backstage Pass, recorded on Nov. 3, Fool.com contributor Trevor Jennewine explains why he thinks Tesla could become the company with the world's largest market capitalization in just a decade. 

Trevor Jennewine: This shows the top 10 companies in terms of market cap right now. We all picked companies that are somewhere on this list. I am going to go a little bit out on a limb here and I'm going to say it could be Tesla. But I'm going to agree with what Brian said about it being a software company. My answer depends entirely on Tesla's ability to capitalize on its AI software. Let me explain.

AI requires a few different things. You need lots of data. You need powerful hardware to train AI models, and then you need powerful hardware to run those AI models and make inferences or decisions to actually put the AI to work. I think Tesla has an advantage in all three areas. Back in 2016, the company upgraded from one external camera to eight external cameras on its cars, along with 12 ultrasonic sensors and radar, which actually does not use the radar anymore. That allows the company to collect driving data. It has over a million autopilot enabled vehicles on the road right now and it's using them to collect data.

Back in 2020, the head of AI at Tesla, Andrej Karpathy said the company had three billion miles worth of real-world driving data. Then there are analysts who think that that figure is over five billion now and that's completely possible. Andrej Karpathy made that statement in February 2020, so it's been about a year-and-a-half since then. To put context around that, near the same time, Alphabet's Waymo came out and said they had about 20 million with an M, 20 million miles. GM's crew said they had about two million miles. 

Tesla has a big lead in terms of data, theoretically. Then in 2019, the company upgraded its on-car hardware and they called this Autopilot 3.0. Part of this was a new AI chip. After the upgrades were rolling out, the Nikkei Asia review published a piece. Analysts basically tore down this technology and they came to the conclusion that it was six years ahead of anything else out there in the market, and they specifically mentioned rivals like Toyota and Volkswagen.

Tesla's in-car chip was six years ahead of anything anybody else had. To put that in context, the company was using Nvidia's chips before they started making their own and Nvidia widely regarded as the gold standard for their AI software than hardware. To receive that praise, I think is meaningful. Then more recently this year, during their AI day, they talked about their D1 chip, and this is going to be the AI chip that powers their data center supercomputer called Dojo. To make a long story short, the way that management explained it, Dojo could be the world's most powerful AI training machine.

 Tesla has more data, it's got a better influence chip and it's got a better training chip than anybody else out there. I think that makes it likely that Tesla will be the first company to bring an autonomous vehicle to market. In fact, Elon Musk back in September of 2020, said that they would have a fully autonomous $25,000 electric vehicle on the market in about three years. It's been a year since he said that, and Tesla has made a lot of promises and then they don't always meet their deadlines, but I think they follow through eventually. I certainly haven't heard any other automakers saying anything like that.