If you think Tesla is an electric vehicle (EV) stock, think again. That company is now one of the largest artificial intelligence (AI) stocks in the world. In fact, AI is likely a much bigger contributor to the company's $1.3 trillion valuation than automobile manufacturing.
Tesla's massive valuation and status as a bona fide AI stock are due to several factors. The biggest factor, however, is the promise of self-driving vehicles.
Autonomous driving software is rapidly advancing thanks to artificial intelligence technologies. Experts agree that robotaxis should become a multitrillion-dollar opportunity globally. Whichever automaker cracks the code of full autonomy using AI, therefore, will win big. And Tesla arguably has one of the most advanced self-driving systems in the world.
Tesla, however, isn't the only EV maker shifting its focus to AI and self-driving vehicles. There is a Tesla competitor following the same growth trajectory, yet its valuation is significantly smaller.
NASDAQ: RIVN
Key Data Points
This Tesla competitor could be the next big AI stock
On the surface, Rivian (RIVN +8.41%) looks like just another EV stock. Last year, the company had two EVs in its lineup -- the R1T and R1S -- both of which cost upward of $100,000 when including options, taxes, and fees. This year, however, it started shipments of its R2 SUV, its first vehicle priced under $50,000. Two more affordable models are set for release sometime in 2028.
These new vehicles are tightly tied into Rivian's new strategic focus, which places a heavy emphasis on AI.
"What I think is going to happen is over the next five years consumers are going to increasingly just expect certain things," Rivian CEO RJ Scaringe told reporters in June. He believes autonomous vehicles with embedded AI features will quickly become the default for the industry. "From a societal point of view, it's just going to become more the way things work."
Image source: Rivian.
Scaringe's vision for the future is a big reason Rivian has ramped up investments in both AI and autonomy, to the point that the company quietly dropped its profitability targets for 2027.
There are already early indications that Rivian's bets are taking off. In March, Uber Technologies agreed to invest up to $1.25 billion into Rivian in exchange for up to 50,000 R2 SUVs. Those vehicles will be used to power Uber's robotaxi division. This deal gives Rivian strong early social validation for its autonomy development and road map.
Rivian's market cap remains around $22 billion despite rising R2 deliveries and growing confidence in the company's AI and autonomy strategy. If you're looking for under-the-radar AI stocks with plenty of upside, Rivian should top your watch list.
