One Reason Tesla Stock Is Called Undervalued
A veteran analyst considers Tesla the "most undervalued AI name." Despite shares of Tesla (TSLA) hitting new all-time highs in 2025, even more growth may lie ahead in 2026.
Growth Beyond Electric Vehicles
This anticipated growth is less about car manufacturing and more about the potential of artificial intelligence (AI), which could become the largest growth opportunity in history.
Valuation Compared to EV Competitors
While Tesla is primarily seen as an electric vehicle (EV) company, its valuation differs greatly from rivals. Tesla shares trade at nearly 17 times sales, whereas competitors like Rivian Automotive and Lucid Group trade between 3 and 7 times sales.
Reasons for Tesla’s High Valuation
- Tesla is an established EV manufacturer with global brand recognition.
- It has unparalleled access to capital, supported by a $1.4 trillion market capitalization.
- These advantages matter in an industry prone to financial failures, with at least 30 EV startups folding in the last decade.
- Launching a successful EV company requires billions of dollars and can take 10 to 20 years from design to production.
- New entrants without existing manufacturing infrastructure face long development times and ongoing capital demands.
"To start an EV business with a single model in production takes billions of dollars. But more importantly, it takes a lot of time, requiring these businesses to continually tap financial markets for more funding."
Analyst insight highlights Tesla’s unique position that justifies its valuation, driven by AI potential and its established market dominance.
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