Over the past year, I've consistently argued that Tesla (TSLA -0.77%) should now be viewed as an artificial intelligence stock, rather than a traditional electric vehicle stock. The reasons for this are simple.
First, Tesla has struggled with auto sales in recent years, yet its market cap continued to soar. This alone should tell you that the market no longer views the business strictly as an automaker. Second, analysts increasingly believe that future sales growth will be spurred by technologies such as self-driving cars and robotaxi services -- two markets enabled by rapid advances in AI. AI is so key to Tesla's future that earlier this year, the company invested $2 billion in xAI, Elon Musk's AI start-up that is now owned by Space Exploration Technologies (SPCX +2.57%).
SpaceX, of course, is also one of the biggest AI stocks on the planet, even though many laypeople think of the company as a rocket stock or a satellite internet company. At its core, however, SpaceX's growth opportunities are fueled by its investments in AI. The same is true for Tesla.
If you needed even more proof that Tesla is being valued as an AI stock, not an EV stock, all you need to do is review the company's recent quarterly earnings announcement. Tesla sold 480,126 vehicles globally last quarter. That's a 25% increase over the prior year, meaningfully exceeding Wall Street estimates of roughly 400,000 vehicles. And yet shares fell 14% on the announcement. Why? Because the company reported lackluster results for its AI-backed initiatives, including robotics and robotaxis.
While Tesla's valuation dipped below $1 trillion following quarterly earnings, investors are still likely attributing hundreds of billions of dollars to the company's AI efforts. And yet there's another EV maker attempting to pivot toward AI, and it still has a market cap of just $23 billion. If you're looking for the next Tesla, this could be it.
Image source: Rivian.
This Tesla competitor could be the next big AI stock
Earlier this year, I named Rivian Automotive (RIVN +1.33%) my top growth stock for 2026. There were two primary reasons for this.
NASDAQ: RIVN
Key Data Points
First, Rivian began deliveries of its third EV model -- the R2 SUV -- in June. This is Rivian's first model priced under $50,000. The company also has plans to release two additional affordable models -- the R3 and R3X -- both of which should also cost less than $50,000.
Given that the vast majority of U.S. car buyers want to spend less than $50,000 on their next vehicle purchase, having more affordable models in its lineup allows Rivian to tap the mass market like never before, similar to what the Model 3 and Model Y did for Tesla. For context, those two models currently account for well over 90% of Tesla's auto sales, underscoring the importance of EV options priced below the $50,000 threshold.
I expect Rivian's R2 SUV to help significantly scale sales, making the company more of a household name and bringing it closer to full profitability. All of this leads to my second reason for liking Rivian stock right now: its AI ambitions.
Rivian recently dropped its 2027 profit guidance due to accelerated investments in AI. While Tesla can physically manufacture the cars necessary for its robotaxi fleet, many other robotaxi divisions don't have the same advantage. That means these robotaxi operators need to source vehicles from other EV companies. With a new affordable model in its lineup, Rivian has positioned itself well. A $1.25 billion order for up to 50,000 R2 SUVs from Uber Technologies earlier this year added significant social validation to Rivian's approach.
Rivian's AI investments -- investments that will help its vehicles reach full self-driving capabilities -- will take time to pay off. But over the next few years, the company should have several affordable models in its lineup, plus a technology stack that robotaxi operators will covet. With a market cap of just $22 billion, Tesla investors should strongly consider Rivian as a higher-risk/higher-upside investment.
