Tesla: AI Stock for 2025?
Source: fool.com
A specific artificial intelligence (AI) stock may become a major success during the second half of 2025. Shares of electric vehicle (EV) manufacturer Tesla have decreased by 21% this year as of June 12. However, Tesla stock has recently shown signs of recovery, with the exception of a temporary sell-off related to an issue between Elon Musk and President Trump. Despite challenges in Tesla's primary EV business, the stock may be set for a significant comeback in the latter part of the year.
Tesla's focus extends beyond just selling EVs, with a strong emphasis on AI and its potential to transform the company. Currently, Tesla's main AI application involves commercializing self-driving software. Tesla intends to use this software in two ways: as a feature in its vehicles and for a fleet of robotaxis offering ride-hailing services.
The initial launch of the Tesla Robotaxi was expected around June 12, but Musk has indicated that the first rides may occur in Austin, Texas, later in June, possibly between June 22 and 28. A successful robotaxi launch could change Tesla from a car manufacturer to an AI-driven service provider that could disrupt ride-hailing, car rentals, and logistics.
AI Stocks and Capital Expenditure
Cloud companies like Microsoft, Alphabet, and Amazon are also significant players in the AI sector. Nvidia is also well-positioned for growth. These three cloud computing giants are predicted to invest almost $260 billion in AI capital expenditures this year.
This level of investment suggests strong demand for AI services. However, the construction of AI data centers and sophisticated AI infrastructure projects takes time. Investors may want to see increased revenue and profit margins resulting from these investments before increasing their positions. Nvidia's exposure to China and potential tariff impacts on its Asian market presence also pose a question.
Tesla's Robotaxi Launch
While Tesla's EV business is slowing and it is not immune to tariffs, the robotaxi launch appears to be a primary driver for Tesla stock. Widespread adoption of self-driving technology could be transformative for Tesla, as its self-driving technology is essentially a software product with higher profit margins than traditional car sales.
The robotaxi service and autonomous driving features could also create more recurring revenue for Tesla, unlike one-time vehicle purchases. Tesla investor Ron Baron anticipates that autonomous driving services could generate billions in annual cash flow for Tesla. Ark Invest CEO Cathie Wood and Wedbush Securities analyst Dan Ives believe the robotaxi could add trillions in value for Tesla shareholders.
Tesla stock has been increasing, but investors should be cautious about viewing this as an opportunity to buy on a dip. Currently, Tesla stock is largely influenced by the positive outlook surrounding the robotaxi launch. As the launch progresses and Tesla expands its robotaxi operations, the stock could rise significantly.
However, it's important to remember that Musk has stated the robotaxi will not be a major financial contributor to Tesla for at least a year. Any surge in Tesla stock during the second half of 2025 is expected to be driven by momentum and excitement, aligning more with swing trading than long-term investing. While Tesla stock may outperform its peers over the next six months, investing in it is currently considered risky. A more cautious strategy involves monitoring the Robotaxi business in the coming months to assess its impact and determine if Tesla's valuation is justified.