Over the past decade, Tesla (NASDAQ: TSLA) and Meta Platforms (NASDAQ: META) have delivered market-beating returns. But some may argue that there is little upside left for either stock. Tesla and Meta have underperformed broader equities this year, and as they invest heavily in artificial intelligence (AI), we may see their margins compressing, leading to even worse stock market performances, or so the argument goes. However, despite this potential problem, there are good reasons to think Tesla and Meta Platforms have significant long-term upside. Read on to find out more.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
1. Tesla
Tesla is a somewhat risky stock. The company’s core electric vehicle (EV) business is facing more competition in the U.S., with Rivian recently launching an alternative to its best-selling Model Y. China-based automakers are also making significant strides abroad. Meanwhile, Tesla is trading at 178.6x forward earnings. The stock could contract over the next few years if it fails to make progress where it matters most. And the market is no longer primarily focused on Tesla’s EV segment. Instead, investors and analysts are paying close attention to the company’s robotaxi service that could transform its business.
A successful robotaxi operation would increase high-margin revenue from ride-fee charges. These could be fairly substantial across the company’s entire fleet. Instead of sitting idle for most of the day, Tesla’s EVs could be active for significant portions of a 24-hour period and would only need “rest” when charging, for maintenance purposes, or while waiting for customers to order rides. At scale, we could be talking about hundreds of thousands, or perhaps even millions of rides per day. Given this potential opportunity, it’s not surprising that many investors are excited about Tesla’s future. The company’s shares recently jumped after it announced it would launch robotaxis in Miami.
But there is even more to Tesla’s business. The EV maker is also working on the next-gen version of its humanoid robot, Optimus 3. Dominating this market could be yet another massive opportunity for Tesla, as humanoid robots capable of performing many tasks as well as humans could see significant demand from individual consumers and especially corporations looking to replace some of their workforce. Tesla will certainly add high-margin revenue streams to its robots, including remote software updates, subscriptions, and premium capabilities.
