Prominent Wall Street Analyst Says Tesla Inc Will ‘Double Down’

Prominent Wall Street Analyst Says Tesla Inc Will ‘Double Down’

Wedbush Securities analyst Dan Ives has said in a fresh note that major tech giants are now running in a “race” to capture the $4 trillion AI market, calling GPUs the new “oil” or “gold” in the technology sector. Ives said that the AI “party” is just getting started and the clock is showing “9p.m. in a party going till 4 a.m. with the rest of the tech world now joining.” Ives thinks spending on GPUs and data centers is the “only game in town.” Ives thinks the “first wave” of AI benefited major technology giants leading the AI race, with the second, third and fourth “derivatives” beginning to show trickle-down effects on other companies.

In a separate investing event, Ives recently predicted that the AI-led bull run can last for another two to three years, saying in a year from now investors will be looking at $3 trillion to $4 trillion market caps for major tech companies.

“The tech bull market is just starting,” Ives reportedly said.

In his latest note Ives highlighted several stocks which he believes can benefit from the AI revolution. In this article we take a detailed look at these stocks and discuss their AI-related growth catalysts and see whether or not they are sound long-term investments. With each stock we have mentioned hedge fund sentiment. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Tesla Inc

Number of Hedge Fund Investors: 74

Dan Ives of Wedbush shocked everyone recently when he said during an interview with CNBC that Tesla Inc (NASDAQ:TSLA) is the “most undervalued AI play” right now. Ives thinks the “AI component” of Tesla could be worth between $1 trillion to $2 trillion.

Ives is banking on August 8 as a “historical day” for Tesla Inc (NASDAQ:TSLA). Musk is slated to unveil his robotaxi plan on August 8, which he chalked out after reportedly scrapping off his previous plan to launch an affordable EV for the mass market.

Ives said that Tesla Inc (NASDAQ:TSLA) could “double” over the next 12-18 months because of its fully autonomous driving plans that will take shape in the coming months.

Ives thinks Tesla has gone through a “Category 5 Hurricane” amid softer demand for EVs especially in China, but the analyst thinks the “Cinderella Story” will return to Tesla Inc (NASDAQ:TSLA) and AI will be the “king.” The analyst said the softening demand for EVs called for an “adult in the room” situation at Tesla, and Elon Musk “stepped up” and took the necessary steps which could bode well for Tesla Inc (NASDAQ:TSLA). He was referring to the massive layoffs announced by Tesla recently which have caused a 14% downsizing at Tesla Inc (NASDAQ:TSLA).

Baron Partners Fund stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its first quarter 2024 investor letter:

“The vast majority of the Fund’s underperformance this quarter stemmed from the Fund’s 10-year investment in Tesla, Inc. (NASDAQ:TSLA). Tesla’s shares fell 29.3% during the period and detracted 13.41% from the Fund’s first quarter results. Although Tesla has contributed importantly to the Fund’s performance since 2014, on occasion it has detracted from quarterly performance. In previous instances when Tesla shares have underperformed during a discrete period, they have shortly afterwards reflected the strong growth of the underlying business and the stock has appreciated considerably. We believe that will be the case again, although cannot guarantee it.

A significant decline also occurred at the end of 2022. In that instance, investors had become concerned about a host of external factors. Investors believed the company founder, visionary, and CEO Elon Musk was distracted by his acquisition of Twitter. They also believed a weak Chinese economy emerging from COVID and U.S. government policies would curtail the purchases of Tesla vehicles. These fears proved to be overblown. As the company achieved milestones in the succeeding year, the stock subsequently doubled over the next 12 months…” (Click here to read the full text)

Overall, Tesla Inc (NASDAQ:TSLA) ranks 10th on Insider Monkey’s list titled 12 Best AI Stocks Leading the ‘Big Tech Race’ to $4 Trillion According to a Famous Wall Street Analyst. While we acknowledge the potential of Tesla Inc (NASDAQ:TSLA), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Tesla Inc (NASDAQ:TSLA) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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