Why Tesla Stock Is Considered Undervalued in AI
One experienced analyst describes Tesla as the "most undervalued AI name." Tesla's shares (TSLA) have soared to record highs in 2025, with even greater potential expected in 2026. This anticipated growth stems less from car manufacturing and more from a sector poised to become the largest expansion opportunity ever: artificial intelligence (AI).
Tesla’s Unique Valuation Compared to EV Peers
While Tesla is commonly seen as an electric vehicle (EV) company, its current valuation reveals an interesting contrast. Tesla's shares trade at nearly 17 times sales, whereas competitors such as Rivian Automotive and Lucid Group range from 3 to 7 times sales.
Reasons Behind Tesla’s Valuation Premium
- Tesla is a proven EV manufacturer with global brand recognition and unmatched capital access, boasting a market cap of $1.4 trillion.
- In contrast, the EV industry faces significant financial challenges, with over 30 EV startups failing in the last decade.
- Bringing a new vehicle from design to production often takes 10 to 20 years, especially for startups lacking manufacturing infrastructure.
- Launching an EV business with just one model in production requires billions of dollars and continuous financing over many years.
One veteran analyst believes Tesla is the "most undervalued AI name."
Tesla's financial strength and time-tested manufacturing capability set it apart, making it better positioned to capitalize on AI-driven growth opportunities compared to newer EV entrants.
Summary: Tesla’s robust capital base and AI focus justify its premium valuation, distinguishing it from financially vulnerable EV startups.