Tesla stock (TSLA) saw a minor drop of 1.4% to $403.13 in early trading on Tuesday. This small move for the electric-vehicle maker is happening as the whole market, including the S&P 500 (SPX) and Dow, is trading lower. The feeling is that everyone is waiting for the upcoming earnings report from Nvidia (NVDA), the leader in artificial intelligence (AI) chips.
Meet Your ETF AI Analyst
- Discover how TipRanks' ETF AI Analyst can help you make smarter investment decisions
- Explore ETFs TipRanks' users love and see what insights the ETF AI Analyst reveals about the ones you follow.
This anticipation affects not just tech investors, but likely Tesla’s CEO Elon Musk as well. The report, due Wednesday evening, is widely seen as the key event that will set the direction for the entire stock market for the rest of the year.
Nvidia’s Growth Confirms AI as the Market’s New Engine
The high expectations for Nvidia show just how much AI technology now runs the stock market. Wall Street is looking for $54.8 billion in sales for the third quarter, a huge jump from $35.1 billion a year ago. Analysts also expect Nvidia to forecast future sales of $62.1 billion for the fourth quarter. This kind of explosive growth is what powers the AI computing that is turning companies like Tesla into an “AI investment.”
Driven by Musk, Tesla uses AI to teach its cars to drive themselves and its humanoid robots to complete real-world tasks. This AI connection is why Tesla’s performance is now heavily linked to the fate of the chip maker.
AI Giants Dominate Market Value, Leaving Old Sectors Behind
The shift to AI dominance is not just a tech story; it’s a total market overhaul. Citi (C) retailing analyst Steven Zaccone pointed out that “It’s a market dominated by tech and the AI craze.” He highlighted the immense gap between the largest tech companies, often called the “Magnificent Seven,” and traditional sectors.
For example, the total value of all retailing stocks is now only about 6% of what the market says the Magnificent Seven are worth. This massive difference is down from 14% in 2022. This simple comparison provides strong evidence of how much Nvidia and its peers have taken over the market’s attention and capital. Tesla investors, therefore, must pay close attention to what Nvidia CEO Jensen Huang says, as his words will likely move their stock along with the rest of the technology-driven market.
Is Tesla a Good Stock to Buy?
Analysts remain cautious about Tesla’s long-term prospects. On TipRanks, TSLA stock has a Hold consensus rating based on 14 Buys, 10 Holds, and 10 Sell ratings. The average Tesla price target of $384.14 implies 3.5% downside potential from current levels.
