The Future of Tesla: Opportunities Amidst Challenges
The “Magnificent Seven” is a catchy name for the largest technology companies globally. Members of this elite group include Microsoft, Apple, Nvidia, Amazon, Alphabet, Meta Platforms, and Tesla (NASDAQ: TSLA).
Although Tesla’s presence among its peers may seem unusual, given the economic landscape, it faces significant challenges due to high inflation and rising interest rates negatively impacting the company’s electric vehicle (EV) market over the past few years.
Despite improving macroeconomic conditions, a recent drop in Tesla’s stock price following the much-anticipated yet underwhelming Robotaxi reveal indicates uncertainty about its future. With Tesla’s third-quarter earnings report scheduled for October 23, expectations are considerably high.
Tesla may not be in an ideal position currently, but as a long-term investor, my focus is on what lies ahead. In this article, I will explain why I believe investing in Tesla still presents a valuable opportunity at this time.
Tesla’s Current Challenges
Tesla CEO Elon Musk has promoted the company’s advancements in artificial intelligence (AI) related to autonomous driving and humanoid robotics for some time. Musk has an impressive knack for storytelling, which has helped him convey a vision of an exciting future for Tesla.
I used the word “could” intentionally. There are no guarantees that Tesla will fully succeed in developing self-driving technology or robotics, and recent events have heightened investor concerns following the Robotaxi demonstration.
In brief, the Robotaxi reveal showcased limited driving capabilities. While the humanoid robot, Optimus, showed entertaining features, like serving drinks and dancing, these applications fall short of practical real-world use.
Overall, the Robotaxi event did not meet Musk’s lofty expectations, leading to a financial backlash from investors.
Image source: Getty Images.
Long-Term Vision Matters
One aspect I appreciate about Musk is his candidness. He shares his thoughts openly and moves forward. While this approach may not resonate with everyone, his comments regarding Tesla shareholders struck me as both realistic and sobering. During the Q2 earnings call, Musk advised investors to sell their shares if they doubted the company’s AI potential.
I expect he will reaffirm this message during the upcoming Q3 earnings call. Essentially, Musk is hinting that developing autonomous driving and robotic technologies requires time and sophistication.
The critical takeaway is that Tesla is actively targeting two major areas of the AI sector, which are projected to be worth trillions in the next few decades. Musk himself deemed the Optimus project a potential $200 trillion opportunity.
Why Now May Be a Smart Time to Buy Tesla
The expectations surrounding the Robotaxi event were arguably too ambitious. However, there’s some responsibility to bear in mind for Musk, given his ongoing promotions of Tesla’s achievements.
The recent decline in Tesla’s stock price appears influenced more by sentiment than by rational analysis. Though Tesla may not be as advanced in autonomous driving or robotics as some may hope, it still leads the field and continues to make significant strides.
The upcoming earnings call is likely to be intense, with Musk facing questions from analysts demanding updates on the timeline for self-driving cars and Optimus’s deployment.
Unless Tesla surprises investors with a new product announcement, it’s likely that the stock may dip further. Nevertheless, such a huge revelation seems unlikely, as Musk appears to be prioritizing long-term development over quick releases.
While other members of the Magnificent Seven may currently seem better situated, I view others’ discontent as an opportunity to increase my investment. As I mentioned earlier, Tesla investors should place less emphasis on immediate results and instead consider where the company could be in the future.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
