In this podcast, Motley Fool analyst Sanmeet Deo and host Mary Long discuss:

• Subpar results from Tesla‘s automotive segment.
• Could Elon Musk’s renewed focus on Tesla revive the company?
• Half-marathons, and the future of humanoid technology.

Additionally, Motley Fool analyst Asit Sharma joins Mary for insights on AMD and how it distinguishes itself from its main competitor.

Where to invest $1,000 right now? Our analyst team has identified 10 top stocks for investment. Learn More »

A full transcript is included below.

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This video was recorded on April 23, 2025

Mary Long: The robots may be advancing, but not as quickly as anticipated. You’re listening to Motley Fool Money. I’m Mary Long, joined today by Sanmeet Deo. Sanmeet, it’s good to see you. How’s everything?

Sanmeet Deo: Great to see you too.

Mary Long: Today, we are focusing on one significant story: Tesla’s latest earnings report, released yesterday after the bell. This has generated a lot of discussion, particularly given the company’s profile and its leader’s controversial nature. Analyst Dan Ives from Wedbush, a long-time Tesla bull, referred to this report as a “Moment of Truth for Tesla.” Let’s explore the details, starting with the big picture. What truths does this report reveal for Tesla?

Sanmeet Deo: The automotive segment appears to be struggling significantly. A key figure that illustrates this effectively is the operating margin, which dropped to 2.1%, down from last year’s 5.5%. This lower margin reflects a combination of decreased average selling prices, reduced delivery volumes, and rising R&D costs. While their energy and storage services showed strength, these segments represent a minor portion of their overall revenue. It raises questions about whether they have lost focus and if competition is more impactful than anticipated.

Mary Long: That’s an important point. The stock seems to have spiked following Musk’s comment about dedicating more time to Tesla, even amidst disappointing automotive segment results. Can we attribute this uptick mainly to his announcement, or is there something else at play?

Sanmeet Deo: Definitely. With the automotive segment accounting for 80% to 85% of their revenue, this was a tough quarter. Lower vehicle deliveries were already signaled prior to the report, and profitability fell below expectations. I initially thought the stock would decline, but Musk’s commitment to refocus on Tesla seems to have reassured investors. Coupled with a general market relief rally, this helped lift the stock.

Mary Long: Musk’s time allocation comment piques my interest. It seems logical that his return could benefit Tesla, but I wonder how much of this quarter’s shortfall hinges on his absence versus the political associations he’s made. How would you weigh these factors concerning the automotive segment’s difficulties?

Sanmeet Deo: I believe a significant portion of the issues could be addressed with Musk’s increased involvement. His leadership has a substantial impact on Tesla’s direction and performance. However, external factors, including his political affiliations, also play a crucial role in shaping sentiment around the company.

# Tesla Faces Challenges Amid Leadership Focus and Market Competition

**Attention to Detail vs. Distractions**
Elon Musk is known for his strong attention to detail, especially when focused on Tesla. Employees report that he tends to dig deep into company operations. However, recent distractions have affected his ability to guide the company effectively. Heightened competition from cheaper cars in China has positioned Tesla at a crossroads. Moreover, concerns over brand perception, influenced by Musk’s political associations, may be impacting consumer sentiment. This shift is reflected in Tesla’s financial performance.

**Insider Activity Raises Questions**
Mary Long noted that while Wall Street seems optimistic about Musk’s comments, insider trading activity tells a different story. Over the past year, Tesla insiders have sold shares 28 times without any purchases. This trend raises questions about confidence levels among those closest to the company. Sanmeet Deo considers these sales mainly part of pre-arranged stock option exercises rather than indicative of deeper issues. However, a recent market sale by Kimbal Musk, totaling $25.6 million, could be seen as a cautionary sign.

**Tesla’s Stock Performance**
Tesla’s stock hit an all-time high of nearly $480 on December 17. Currently, it hovers around $250. Long asked Deo when he believes the stock might reach its previous peak again. He humorously suggested a distant date, estimating at least five years for a potential rebound. Traditionally, market corrections often lead to extended periods before stocks recover. For Tesla to ascend again, the automotive segment must regain growth momentum, aided by progress in fully autonomous driving technologies.

**The Challenge of Affordability**
Long highlighted a weak point in Tesla’s recent performance—the automotive segment. The earnings call emphasized the urgency of developing more affordable options amid shifting trade policies. The push for a less expensive Tesla has generated considerable anticipation, yet specific plans remain unclear. Deo stressed that affordability is crucial to remain competitive. For Tesla to effectively target a mass market, a new vehicle priced around $20,000 could help garner significant market share.

**Consequences of Flattening Deliveries**
If Tesla’s vehicle deliveries continue to plateau, it could significantly impact the company, given that automotive sales account for over 80% of its revenue. While other sectors like energy storage and services show growth, they currently do not constitute a core part of Tesla’s business. Deo emphasized that if the automotive segment falters, the overall financial health of the company could suffer unless the autonomous sector develops sooner than expected.

**Growth in Energy Generation and Storage**
Tesla’s energy generation and storage division has demonstrated steady growth recently, with noticeable revenue increases this quarter. The focus on developing sustainable energy solutions is becoming increasingly relevant as the market shifts. This segment could offer a vital buffer against potential declines in automotive sales.

In summary, Tesla faces a critical period marked by leadership focus, competitive pressures, and evolving consumer expectations. The potential for a more affordable vehicle could redefine its automotive market position, but overcoming current challenges will be key to its future success.

Tesla’s Energy Demand Surges Amid Leadership Changes and Innovations

Growing Demand for Energy Solutions

Tesla is witnessing a notable rise in demand for its residential power walls and grid-scale MegaPak battery solutions. This surge is driven by the increasing adoption of renewable energy, the need for grid stabilization, resilience against outages, and escalating energy costs. The company finds itself in a strong market position with high demand for its products.

Impact of Elon Musk’s Absence

Mary Long: We’ve discussed Elon Musk’s absence from Tesla and what it might mean for the company. It’s intriguing to see growth in the energy segment while Musk focuses on DOGE. Does this imply that the energy division can thrive independently?

Sanmeet Deo: The daily operations seem stable without Musk, indicating that the team can effectively manage day-to-day tasks. However, Musk’s visionary guidance is crucial for steering the company strategically, especially regarding the integration of autonomous technology, vehicles, and energy solutions. While the operational side can perform adequately, scaling without Musk’s vision may pose challenges.

Upcoming Innovations: Robotaxis and Cybercabs

Mary Long: One exciting aspect of Musk’s vision is the much-anticipated robotaxi service. He mentioned that the pilot launch in Austin is scheduled for June. This is approaching quickly, and it will be fascinating to see if the company meets this timeline. Additionally, he noted that volume production of the Cybercab is slated to begin in 2026. What distinguishes these two products, and how do they intertwine?

Sanmeet Deo: Great question. Robotaxis will utilize existing Tesla models, mainly the Model Y, for fully autonomous operations. In contrast, Cybercabs are purpose-built vehicles specifically designed for the robotaxi service. The Austin pilot aims to gather data and assess operational viability. Following that, dedicated Cybercabs will start production in 2026, with an eventual rollout planned. On a side note, I recently observed Wemos in Phoenix—they certainly have a futuristic look.

Humanoid Robots: Tesla’s Future Potential

Mary Long: Now, let’s discuss the humanoid robots, a topic you seem passionate about. Musk predicts that thousands of Optimus robots will operate in Tesla factories by the end of the year, with plans to scale production to millions annually. Do you believe this timeline is realistic, or is it another case of Musk overselling?

Sanmeet Deo: I am indeed a fan of humanoids! They could be easier to scale due to Tesla’s expertise in manufacturing and AI. However, I am skeptical about the ambitious timeline. Musk has a history of overpromising delivery timelines, and while it’s possible to achieve significant scaling in a decade or two, it seems unlikely in the next few years.

Revenue Projections for Humanoid Robots

Mary Long: Musk has suggested that humanoid robots could generate $10 trillion in revenue for Tesla. What do you think? Is this figure plausible, regardless of the timeline for production?

Sanmeet Deo: That $10 trillion figure does seem far-fetched but breaking it down offers perspective. With approximately 128 million households in the U.S. and expectations of $30,000 per robot, potential revenue could reach $3 trillion from household sales alone. The commercial side might add another $7 trillion from manufacturing and service functions. While ten trillion is ambitious, it may not be entirely out of reach considering additional revenue streams.

Humanoids in Action

Mary Long: Recently, humanoid robots participated in a half-marathon in Beijing. This event raised questions about the real benefits of such races. Was it a publicity stunt or a genuine test of capability? How do you think Optimus would have fared in that event?

Sanmeet Deo: I doubt Optimus would do well. Its movement is quite slow and measured, without much indication that it can run effectively. It’s amusing to consider why we are attempting to create machines that could outperform humans.

Mary Long: It also overlooks the essence of running, which is about personal improvement and growth, not necessarily speed.

Sanmeet Deo: Exactly! Breaking speed records by humans holds more significance than similarly non-human achievements.

Mary Long: Thank you, Sanmeet, for your insights into Tesla’s earnings and future prospects.

Sanmeet Deo: Thank you, Mary.

Matt: Hello. My name is Matt.

McKinley: I am McKinley. We are the Father-Son team that brings you History Dispatches.

Matt: History Dispatches is a short daily history show where we talk about topics from all over the world and throughout history.

# AMD vs. NVIDIA: Exploring the Semiconductor Landscape

## Historical Context of the Semiconductor Market

Today, semiconductor stocks like AMD and NVIDIA are frequently in the news. While NVIDIA often takes center stage, AMD is making significant moves in the industry. Let’s delve into the unique aspects of both companies.

## Overview of AMD and NVIDIA

**Mary Long:** NVIDIA is not the only game in town. Asit Sharma joins me to discuss AMD, a company vying to compete more directly with NVIDIA. Asit, despite the cyclical nature of semiconductor stocks, they seem to dominate headlines. What sets AMD apart from NVIDIA?

**Asit Sharma:** Mary, just to clarify, I hold shares in both companies. AMD operates differently from NVIDIA; it is more diversified in the semiconductor ecosystem. Although NVIDIA is branching into various areas, AMD creates chips for servers, embedded systems, and gaming, including GPUs. It also produces GPU accelerators where the current excitement lies.

## Customer Base and Market Differentiation

**Mary Long:** AMD’s customer list includes major players like Microsoft, Meta, Alphabet, and Oracle. NVIDIA’s customer base overlaps significantly; it too counts Microsoft and Meta among its key clients. If a tech company needs AI chips, what would compel them to choose AMD over NVIDIA?

**Asit Sharma:** That’s a crucial distinction. When we talk about AI chips, we generally refer to GPU accelerators used for generative AI and large language models. For companies like Amazon or Microsoft, diversification away from NVIDIA is appealing. Recent trends indicate a desire to lower costs in their product offerings. For instance, Oracle recently ordered around 30,000 MI 355x accelerators from AMD, worth billions. The total cost of ownership can be lower with AMD’s chips compared to NVIDIA’s.

## Comparing Technology and Development Paths

You noted that NVIDIA offers the fastest chips. For retail investors, understanding the technological differences can be daunting. What does AMD’s journey to close this gap resemble?

The difference largely hinges on software. NVIDIA’s strength lies in its CUDA software libraries, which enhance the functionality of its GPUs. While these libraries can be costly, they provide significant performance benefits. However, they are part of a closed system.

AMD, in contrast, offers ROCm, an open-source version that invites broader contributions for improvement. For AMD to excel, it needs to enhance its software libraries while ensuring its GPUs compete effectively with NVIDIA’s offerings.

## Industry Trends and Future Prospects

Looking ahead, NVIDIA’s innovative approach has transitioned from selling individual GPUs to providing integrated rack-scale systems. This means companies can connect multiple GPUs to work as a cohesive unit, substantially increasing computational power.

NVIDIA’s ENV Link technology plays a crucial role here, allowing seamless communication among GPUs on a rack, making them more powerful than when they operate individually. As AMD progresses, enhancing its technology and user experience is vital for maintaining competitiveness in this evolving landscape.

In summary, while NVIDIA currently holds a significant lead, both companies have their own strengths and face unique challenges in the rapidly changing semiconductor market.# AMD’s Strategic Moves: Competing with NVIDIA in the Tech Landscape

The competition between AMD and NVIDIA continues to evolve, particularly as AMD aims to enhance its Rack Scale systems. Achieving this goal relies on two critical aspects: improving software capabilities and optimizing Rack Scale technology. As performance metrics shift away from merely measuring GPU speed and workloads, AMD is closing the gap on benchmarks, focusing on making GPUs work together more effectively.

Mary Long: For investors looking to evaluate AMD’s progress, it’s essential to consider the company’s R&D expenditures. Between 2021 and 2022, AMD nearly doubled its R&D spending, and while recent years show a slower rate of increase, the impact on margins remains unclear. Operating margins were above 22% in 2021 but are projected to be under 8% in 2024. In contrast, NVIDIA’s operating margin was approximately 62.5% for fiscal 2025. This difference highlights AMD’s efforts to close the gap with NVIDIA. When can investors expect to see returns from these R&D investments?

Asit Sharma: It’s important to note that NVIDIA’s operating margin of 62.5% is an exceptionally high benchmark, not just for AMD but for any S&P 500 company. NVIDIA capitalizes on strong demand and pricing power, maintaining healthy margins due to its GPU-focused business model. Historically, its margins can fluctuate widely, sometimes dipping during economic downturns. Investors should consider that AMD, with its more diversified portfolio, should target an operating margin around 20% during favorable market conditions. Having achieved that margin in 2021, AMD is now focusing on long-term growth and innovation.

I believe we will start seeing R&D investments translate into results by the end of 2025. Projections indicate that AMD’s operating margin may rise to approximately 10% this year, with a further increase to 12-14% by 2026 and reaching around 20% by 2027. Early challenges in pivoting to the accelerator market required significant initial investment, but this has also positioned AMD as a contender in the chip industry. Notably, AMD recently overtook Intel in data center CPU market share, illustrating its comeback.

Mary Long: Another pivotal development is AMD’s recent acquisition of ZT Systems, which was announced in August of last year at nearly $5 billion, with about 75% of that in cash. This acquisition aims to bolster AMD’s position further. Can you explain ZT Systems’ role and how it contributes to AMD’s growth strategy?

Asit Sharma: ZT Systems specializes in server and rack system design and manufacturing for data centers. AMD’s strategy involves selling off the manufacturing segment since its core competency lies in design, partnering with companies like TSMC for production. This acquisition will allow AMD to leverage its Infinity Fabric technology to develop systems that compete with NVIDIA’s rack-scale offerings. We expect to see AMD’s first significant response, the MI 4000 system, by 2026. AMD doesn’t need to overshadow NVIDIA; even capturing a fraction of their revenue could significantly enhance AMD’s margins and free cash flow—projected to double this year, with potential to triple by 2028.

Mary Long: Throughout our discussion, comparisons between AMD and NVIDIA have surfaced repeatedly. Even with AMD’s strong potential for growth, AMD shares have dropped more than 40% over the past year, while NVIDIA shares have risen nearly 30%. What accounts for this discrepancy in market perceptions?

Asit Sharma: Investor concerns are valid. The market questions why AMD hasn’t seen explosive GPU sales following its entry into that segment. Early execution has been slower than expected, raising doubts about AMD’s competitive edge. Despite these challenges, it’s critical to understand that AMD doesn’t solely rely on its GPU business for success. The ongoing comparison to NVIDIA, which currently leads the market, casts a shadow over AMD. However, AMD thrived in a similar position against Intel in the past. This ongoing competitive landscape is an opportunity rather than a setback.

# Oracle’s Strategic Moves Challenge NVIDIA’s Market Dominance

The competitive landscape between Oracle and NVIDIA is evolving. While both companies have strengths, Oracle’s recent actions could signal a shift in market dynamics. Many companies are now evaluating their long-term spending, particularly in a time when innovation costs are rising significantly.

Oracle’s recent order hints that its cost benefits are becoming increasingly attractive to businesses hesitant to invest heavily year after year. The pace at which NVIDIA rolls out new products, approximately every 12 months, may be unsustainable for some clients. As innovation accelerates, companies may prioritize cost-effectiveness over the latest technology. This is akin to consumers who once indulged in frequent upgrades but eventually become more cautious when money is tight. They might choose to maximize the use of what they have already purchased.

AMD stands to gain from this evolving sentiment. Some hyperscale companies are beginning to consider maintaining existing GPU resources rather than constantly upgrading to the latest models. This approach could open opportunities for AMD to capture market share among price-sensitive clients.

Mary Long: As always, the views expressed in this discussion may influence investor opinions, and it’s important to conduct independent research before making financial decisions. Personal finance content adheres to Motley Fool’s editorial standards and is not endorsed by advertisers. This has been Mary Long with the Motley Fool Money team. Thank you for listening. We’ll see you tomorrow.

Suzanne Frey, a board member at The Motley Fool, is an executive at Alphabet. Randi Zuckerberg, who previously directed market development at Facebook and is the sister of Meta Platforms CEO Mark Zuckerberg, also serves on the board. John Mackey, the former CEO of Whole Foods Market and an Amazon subsidiary, is another board member. Asit Sharma holds positions in Advanced Micro Devices, Amazon, Microsoft, Nvidia, and Oracle. Mary Long does not have positions in any stocks mentioned. Sanmeet Deo has investments in Alphabet, Amazon, and Tesla. The Motley Fool maintains positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, Oracle, and Tesla. The Motley Fool considers recommending January 2026 $395 calls and short January 2026 $405 calls on Microsoft. The Motley Fool operates under a disclosure policy.

The opinions expressed here represent those of the author and do not necessarily reflect the views of Nasdaq, Inc.