The "Magnificent Seven" stocks currently trade at their cheapest valuation premium versus the remaining 493 companies in the S&P 500 (^GSPC +0.26%) since 2017, according to Goldman Sachs. But none have fallen more sharply than Tesla (TSLA 0.69%). The stock is down 50% from its record high.
However, senior research analyst Dan Ives at Wedbush Securities recently told Bloomberg that Tesla could be a $2 trillion company within 24 months. That forecast implies 160% upside from its current market value of $770 billion and a share price above $620.
Here's what investors should know about Tesla.
NASDAQ: TSLA
Key Data Points
Tesla is losing market share in electric cars, and Elon Musk's politics are a problem
Tesla accounted for 17% of battery-electric vehicle (BEV) sales in 2024, down from 19% in 2023. And market share losses have accelerated this year due to increased competition and CEO Elon Musk's involvement in politics. Tesla accounted for just 12% of BEV sales year to date through February, while Chinese automaker BYD took the top spot with 15% market share.
Likewise, in the first quarter of 2025, Tesla deliveries declined to the lowest level since Q2 2022, another sign that demand is deteriorating. The company plans to launch a more affordable vehicle in the first half of 2025, which may help to some degree, but the more pressing issue is Musk becoming a political figure. He has undoubtedly upset potential buyers and may have tarnished the Tesla brand.
Democrats recently targeted Musk in Wisconsin with advertising that claimed, "Elon Musk is out of control, and now the power hungry billionaire is unloading millions to buy the Wisconsin Supreme Court." Ads that paint Musk as callous or even villainous may become increasingly common as the 2026 midterm elections approach, and that could dissuade some consumers from supporting his companies.
In short, Musk has put Tesla in the political crosshairs, and investors must ask themselves whether they are comfortable with that risk. Musk already manages several companies yet chose to take on additional work with the Department of Government Efficiency. Is he too distracted to run Tesla? Would Tesla be OK (or even better off) if Musk was less involved? Those are difficult questions to answer.
However, Adam Jonas at Morgan Stanley recently reiterated his bullish outlook for Tesla. He recently wrote, "We believe the challenges facing Tesla's current business are widely reported and well known, while the opportunities in the future business are potentially greatly underestimated."
Image source: Getty Images.
Tesla has a massive opportunity in physical artificial intelligence
Physical artificial intelligence (AI) is the technology that allows machines like autonomous cars and robots to understand and interact with the real world. Dan Ives says autonomous driving technology alone is a $1 trillion opportunity for Tesla. The company plans to launch a robotaxi service in Austin, Texas, this June, followed by several other U.S. cities by year-end.
Citigroup estimates autonomous humanoid robot sales will reach $209 billion by 2035 and $7 trillion by 2050, up from zero in 2025. Musk says Tesla has the "best team of humanoid robotics engineers in the world." The company debuted its Optimus prototype in 2022 and plans to use the robot internally this year. It may begin selling Optimus to other companies as early as the second half of 2026.
Musk believes autonomous driving technology and robotics could eventually make Tesla the most valuable company in the world, perhaps worth even more than the next five companies combined. But there is a great deal of execution risk baked into that prediction. Alphabet's Waymo has been providing autonomous rides to consumers for several years, so Tesla is already behind the curve.
Tesla stock looks expensive today, but it may appear cheaper in hindsight
Tesla stock has tumbled 50% from its record high as investors have become concerned by weak demand and disappointing performance metrics. The company has yet to announce financial results for the first quarter, but the numbers will likely be dismal after deliveries fell to the lowest level in nearly three years.
Additionally, Wall Street expects the company's adjusted earnings to grow at 20% annually through 2026. That consensus makes the current valuation of 100 times adjusted earnings look absurdly expensive. However, it fails to account for a possible acceleration in earnings as the company monetizes robotaxis and Optimus.
For instance, Adam Jonas at Morgan Stanley believes robotaxis could add $17 billion to the bottom line by 2035. Comparatively, the company reported non-GAAP (generally accepted accounting principles) net income of $8.4 billion last year. So, Jonas believes autonomous ride-sharing services will become a substantial source of profit over the next decade. If he is correct, the stock may appear cheap in hindsight.
Personally, I agree with Dan Ives that Tesla could potentially achieve a $2 trillion market value within two years. However, I believe Musk needs to refocus on the company sooner rather than later for that to happen. Tesla must scale its robotaxi business as quickly as possible because Waymo already has a head start.
