Elon Musk’s Bold Predictions for Tesla: Is the Stock Worth the Investment?

Elon Musk, the founder of companies like Tesla TSLA, SpaceX, and xAI, is the world’s richest man and a disruptor in industries ranging from electric vehicles (EVs) to space exploration. Widely discussed and often polarizing, Musk has a mix of passionate supporters and critics. There’s no middle ground – you either support his vision or question it.

Known for making ambitious promises, Musk has delivered on several occasions. Among his recent predictions, one stands out: during Tesla’s latest earnings call, Musk expressed his belief that Tesla could surpass not just its competitors, but also become more valuable than the next five top companies combined—namely, Apple AAPL, Microsoft MSFT, NVIDIA NVDA, Alphabet GOOGL, and Amazon AMZN. That’s a bold claim!

Musk attributes his confidence to advancements in artificial intelligence (AI), autonomous vehicles (AVs), and Tesla’s Optimus robot. He even suggested that Optimus could generate $10 trillion in revenue over time—a staggering figure that deserves a closer look.

Considering Musk’s history of lofty predictions, is now the right time to invest in Tesla stock? Let’s examine his assertions and Tesla’s recent developments in these areas to determine whether an investment is warranted.

The Promises Surrounding AI and Optimus

For the past year, Musk has encouraged investors to see Tesla as an AI and robotics company, rather than strictly an auto manufacturer. In his latest earnings call, he stated, “I see a path for Tesla to be the most valuable company in the world by far. Not even close—to the point where it could be worth more than the next top five companies combined. While this is a tough journey, Musk believes it is achievable, largely driven by autonomous vehicles and humanoid robots.”

He elaborated, “I think 2025 will be considered one of the most significant years in Tesla’s history. No other company competes with Tesla in real-world AI—its closest competitor is distant.” This statement raises questions: Is this confidence truly grounded, or is it a measurement of blind faith in his company? That’s for investors to decide.

Musk also forecasted that the Optimus robot could potentially generate over $10 trillion in revenue. Even while acknowledging that this projection sounds far-fetched, he holds firm in his belief that it may be accurate. He aims to produce thousands—if not 10,000—Optimus units this year, intending to utilize them in Tesla factories before eventually delivering them to external companies in the following year. This ambitious vision, however, lacks a clear timeline for when production will hit the target of one million units annually at a cost of around $20,000 each.

According to Fortune Business Insights, the humanoid robot market is expected to grow to $66 billion by 2032, signaling a compound annual growth rate (CAGR) of 45.5% from 2024 to 2032. Although this growth forecast is significant, Musk’s $10 trillion revenue claim seems overly optimistic at this stage.

Musk’s grand predictions often emerge during challenging times, a strategy he uses to reassure investors and rekindle interest in Tesla’s potential.

Tesla’s Developments in Autonomous Vehicles and Robotaxi

In June, Tesla plans to launch its unsupervised Full Self-Driving (FSD) service as a paid offering in Austin, following the rollout of FSD Version 13 in December. The company already successfully operates autonomous vehicles at its Fremont factory and intends to expand this service across several regions in the U.S. by the end of the year, subject to regulatory clearances.

With Musk now overseeing the newly established Department of Government Efficiency, regulatory simplifications for AV deployment may benefit Tesla. Nevertheless, Alphabet’s Waymo continues to lead the AV and robotaxi sector. Years of real-world testing and substantial investments—including a recent $5 billion commitment—enhance Waymo’s competitive edge.

2025 is shaping up to be a crucial year for Tesla. The key question remains: can it finally realize its long-standing robotaxi vision, and should investors act on its lofty claims now?

Current Performance and Valuation of TSLA

Recently, TSLA saw a surge in value at the end of 2024, largely attributed to Trump’s election win and Musk’s connections. However, the stock has recently declined, falling around 5% yesterday, which was a stark difference compared to its peers. In fact, TSLA was among the poorest performing stocks in the S&P 500 on that day.

TSLA’s Year-to-Date Price Performance Compared to Mega Tech Peers

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Looking at valuation, Tesla appears overhyped. It is currently trading at a forward sales multiple of 10.77, above its five-year average. The company has a Value Score of F.

Image Source: Zacks Investment Research

Analyst Expectations for Tesla

In the last week, Tesla’s earnings estimates have been adjusted downward, indicating a growing sense of skepticism among analysts about the stock’s future performance.

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Investment Strategy for Tesla

The current state of Tesla’s EV operations presents challenges, yet a few factors may offer potential for recovery.
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Tesla Faces Challenges with AI and Robotaxi Ambitions

Delayed Production and Investor Caution Surrounding Cybercab and Optimus

Despite a promising Energy Storage division, a strong balance sheet, and opportunities in the charging market, Tesla is increasingly presenting itself as an AI-robotics company rather than just an automobile manufacturer. The rollout of the Cybercab is not set for mass production until 2026, making it risky to be overly optimistic about the Optimus humanoid robot. The scaling of this robot is unlikely to meet CEO Elon Musk’s ambitious revenue targets for several years to come.

Investors should remain cautious, as Tesla has a history of delays in achieving its goals. For instance, the Roadster vehicle hype began when preorders opened in 2017, requiring a $50,000 deposit. Now, seven years later, many customers are still waiting for an estimated delivery date.

TSLA must deliver real results to support the excitement around its AI and autonomous vehicle projects. At this moment, investing solely based on Musk’s aspirations and incredibly ambitious plans may be premature.

Given these factors, Tesla may be a stock to steer clear of for now, as indicated by its current Zacks Rank of #5 (Strong Sell).

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The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.