Where do you get the energy?
It's the question you ask someone who's bouncing all over the place, getting things done, while you're sitting in your underwear in your living room with the remote in your hand.
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However, in the wide-open frontier of artificial intelligence, the energy question takes on a new and very important meaning because AI consumes an awful lot of electricity and water to work its particular brand of magic.
A report by Goldman Sachs Research estimated that data center power demand will grow 160% by 2030 as "the pace of efficiency gains in electricity use slows and the AI revolution gathers steam."
“At present, data centers worldwide consume 1%-2% of overall power, but this percentage will likely rise to 3%-4% by the end of the decade,” the study said.
In the U.S. and Europe, Goldman Sachs said this increased demand will help drive the kind of electricity growth that hasn’t been seen in a generation.
"Along the way, the carbon dioxide emissions of data centers may more than double between 2022 and 2030," the report said
Speaking of energy, Tesla Energy Operations, the clean energy division of electric vehicle maker Tesla (TSLA) , develops, manufactures, sells, and installs photovoltaic solar energy generation systems and battery energy storage products.
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Investor interest in Tesla Energy
The company was the subject of a research note by Morgan Stanley analyst Adam Jonas, who cited the AI issue.
Jonas said that investor interest in Tesla Energy has increased in the past few weeks. That's in the context of faster adoption of artificial intelligence driving a multigenerational increase in energy demand combined with a beat in second-quarter storage deployments.
Tesla Energy deployed 9.4 gigawatt hours of energy-storage products in the second quarter, more than doubling its previous record set in the prior quarter, the company said on July 2.
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The group deployed 4.1 GWh of energy storage in the first quarter, bringing its total storage deliveries to 13.5 GWh in the first half. Tesla Energy delivered 14.7 GWh of storage in 2023.
Within the investment firm's unchanged $310 Tesla price target, Jonas said, Tesla Energy now represents $50 a share, amounting to a $183 billion business, compared with $36 previously.
The analyst raised Tesla Energy forecasts and lowered Tesla Auto forecasts. The firm affirmed an overweight rating and a $310 price target on Tesla shares.
Meanwhile, Tesla shares have been up 11 consecutive trading sessions, outperforming even the major large-cap indexes. The stock is up 44.2% over that time frame.
While the stock is surging, Tesla’s share of EV sales fell below 50% for the first time in the U.S. to 49.7%, according to new estimates from Kelley Blue Book, which is owned by Cox Automotive.
Electric vehicle sales in the U.S. grew by 11.3% year over year in the second quarter, reaching a record-high volume of 330,4631 units,
This growth was driven partly by improved availability, sharper discounts and more leasing, Cox said. Total EV sales last quarter were 23% higher than first-quarter sales.
In the second quarter, market leader Tesla's sales volume declined 6.3% year over year, but new products, notably from General Motors (GM) , helped lift overall volume higher.
Cox Automotive's industry insights director, Stephanie Valdez Streaty, said that EV sales exceeded expectations during a record-breaking quarter.
"Despite Tesla’s declining sales, with its EV sales share now below 50% for the first time, the overall competitive landscape for electric vehicles is intensifying," Streaty said in a statement.
Fund manager: 'Tesla acting like a meme stock'
"This increased competition is leading to continued price pressure, gradually boosting EV adoption," she added. "Automakers that deliver the right product at the right price and offer an excellent consumer experience will lead the way in EV adoption.”
Tesla's recent stock surge prompted a stark observation from Bill Gross, an investor and fund manager and co-founder of Pacific Investment Management.
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"Tesla acting like a meme stock — sagging fundamentals, straight up price action," Gross said on X. "But then there seems to be a new meme stock every other day now. Most are pump and dump. Chewy. Zapp. And old favorite GME."
Analysts at Goldman Sachs raised the firm's price target on Tesla to $248 from $175 and maintained a neutral rating on the shares.
The firm updated its 2024 earnings-per-share estimate, including SBC, to $2.05 from $1.90, primarily reflecting higher deliveries. Goldman increased its multiple to reflect increased market multiples, and investors will likely be more forward-looking on full self-driving potential.
Earlier this month, Tesla, which is scheduled to report earnings on July 23, said it delivered 443,956 new cars over the three months ending in June. That was down 4.7% from the year-earlier period and around 8.4% south of the record 484,507 tally reached over the three months ending in December.
Analysts' delivery forecasts ranged from 425,000 to around 440,000, with LSEG data pegging the June-quarter target at around 438,000 units.
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However, Tesla reportedly manipulated the effectiveness of its Full Self-Driving and Autopilot technologies to work much more effectively when the CEO and a cohort of other Musk-friendly influencers were behind the wheel.
While Goldman continued to believe Tesla was well-positioned for longer-term growth, given its strong position in the EV and clean-energy markets, the investment firm expects weaker market conditions to weigh on earnings in the near to intermediate term and views the valuation as full.
As for the robot axis, Goldman Sachs sees an early-stage revenue opportunity based on current ride-sharing market prices and the projected deployment of autonomous taxi vehicles.
Musk plans to unveil the company’s robotaxi prototype at an Aug. 8 event. The company is looking to pivot from its traditional carmaking roots to a broader business model led by autonomous driving, energy storage, and next-generation robotics.
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