AI Expectations Priced into Tesla Stock

Shares of Tesla (TSLA) climbed to a 7-1/2 month high Wednesday and are up +82% this year, rebounding sharply from last year’s -65% plunge.  Tesla is benefitting from the artificial intelligence (AI) frenzy that is pushing stocks with AI relevance higher.  Tesla’s valuation has exploded on hopes for its ambitious AI project of cars that can drive themselves.

With this year’s sharp rally.  Tesla’s valuation has soared to about 61 times forward earnings, compared with the mid-to-high single-digit multiples of General Motors (GM) and Ford Motor (F).  Even AI stalwart Nvidia (NVDA) trades at only 42 times forward earnings.  Tesla CEO Musk said back in June 2022 that his company’s value was almost fully dependent on cracking the code for self-driving cars, and “that really is the difference between Tesla being worth a lot of money and being worth basically zero.”