We recently compiled a list of the Top 10 AI Headlines Shaping Wall Street for 2025. In this article, we are going to take a look at where Tesla, Inc. (NASDAQ:TSLA) stands against the other AI stocks.
As reported by Reuters, Wall Street’s major indexes started the final trading session of 2024 on a high note, continuing the two-year-long bull market. This was marked by economic recovery after the pandemic, hopes for lower interest rates, and excitement about the AI boom. All three major stock market indexes, the S&P 500, Dow, and Nasdaq, are near record highs and ready for their second consecutive year of gains.
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Despite an overall good year, late 2024 saw a pullback in artificial intelligence stocks. From profit-taking and investors locking in gains from the year’s substantial rallies to concerns over high valuations and the Federal Reserve’s cautious stance signaling fewer interest rate cuts in 2025, the sector was a bit “choppier” than usual these last few weeks.
However, Wall Street analysts expect that the artificial intelligence sector will be in full gear in 2025, with a $2 trillion surge in AI-related capital expenditure over the next three years. Moreover, regulatory discussions around AI ethics and safety, spearheaded by global governments, are creating a supportive environment for innovation.
“We believe tech stocks will be robust in 2025 on the shoulders of the AI Revolution and $2 trillion+ of incremental AI capex (spending) over the next 3 years”.
-Wedbush Securities analyst Daniel Ives.
According to Ives, tech stocks are anticipated to rise 25% in 2025 as Wall Street and investors deal with “a less regulatory spiderweb” under the administration of President-elect Donald Trump. He also believes that stronger artificial intelligence initiatives in the federal government should give the sector a boost. However, there may be “white-knuckle moments” in the year ahead over Federal Reserve decisions, uncertainty over U.S.-China tariffs, and concerns from critics who believe stock valuations are too high.
“This will create the opportunities to own the tech theme and key names which has been our core investing tech playbook the last 2 years”.
-Dan Ives.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives. On December 27, UBS analyst Joseph Spak maintained a Sell rating on Tesla and set a price target of $226.00. The analyst anticipates 510,000 vehicle deliveries, a 5% year-over-year increase but slightly below the consensus of 512,000 units. Historically, Tesla’s delivery figures have influenced stock performance. However, the firm notes that investor focus is shifting toward the company’s advancements in artificial intelligence (AI) and autonomous driving technologies. Consequently, Tesla’s valuation has pushed higher, emphasizing future potential over current metrics. At the same time, the firm remains skeptical about Tesla’s ability to steadily meet high growth expectations amidst rising competition in the EV market and uncertainties around AI-driven profits. This implies that Tesla’s current market valuation doesn’t fully account for the risks and uncertainties ahead.
Overall TSLA ranks 3rd on our list of the AI stocks that are shaping Wall Street for 2025. While we acknowledge the potential of TSLA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.