Why Tesla Stock Is Considered Highly Undervalued
One experienced analyst claims Tesla is the "most undervalued AI name." Despite shares of Tesla (TSLA) reaching new all-time highs this year, even greater growth could lie ahead in 2026.
The Growth Potential Beyond Cars
This growth prospect has little to do with Tesla’s car manufacturing. Instead, it centers on what might become the largest growth opportunity ever: artificial intelligence (AI).
Tesla’s Valuation Compared to EV Competitors
- Tesla’s shares currently trade at nearly 17 times sales.
- EV rivals like Rivian Automotive and Lucid Group trade between 3 to 7 times sales.
Two key factors explain this valuation difference:
1. Proven Market Leadership
Tesla is an established EV manufacturer with global brand recognition and unparalleled capital access due to its $1.4 trillion market capitalization. This matters in an industry marked by many financial failures.
2. Barriers to Entry for New EV Startups
Over the past decade, at least 30 EV startups have failed. Bringing a new vehicle from design to production can take 10 to 20 years, especially for startups lacking manufacturing infrastructure. Launching an EV business around a single model requires billions of dollars and repeated funding rounds.
Tesla is traditionally viewed as an electric vehicle (EV) stock, but its valuation reflects more than just automotive success.
Author’s summary: Tesla’s stock valuation reflects its unique position as a proven EV leader and its vast potential in the emerging artificial intelligence market.