1 Reason Tesla Stock Is Called a

Why Tesla Stock Is Viewed as Undervalued in AI

One veteran analyst considers Tesla the "most undervalued AI name." Tesla shares (TSLA 2.49%) have surged to new all-time highs this year, with even greater potential expected in 2026. This growth outlook is driven less by car manufacturing and more by Tesla's position in artificial intelligence (AI), which could become the largest growth opportunity in history.

Tesla’s Unique Valuation Compared to EV Peers

Traditionally, Tesla is seen as an electric vehicle (EV) stock, yet its valuation sets it apart. Tesla trades at nearly 17 times sales, whereas competitors like Rivian Automotive and Lucid Group trade at just 3 to 7 times sales.

Key Reasons for Tesla’s Valuation Premium

Over the past decade, more than 30 EV startups have failed. Launching a new EV brand requires 10 to 20 years of development and billions of dollars, especially for companies without existing manufacturing infrastructure. This lengthy process forces startups to repeatedly seek funding, adding to financial risk.

"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."

Summary

Tesla’s valuation reflects its proven manufacturing success, financial strength, and pioneering role in AI, setting it apart from other EV companies with riskier business models and weaker capital access.

Author’s note: Tesla's value lies not just in electric vehicles but in its AI potential and solid market position, making it uniquely attractive among EV stocks.

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The Motley Fool The Motley Fool — 2025-11-04

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