Tesla, Inc. (NASDAQ:TSLA) rises and falls on the turbocharged visions of CEO Elon Musk, who is no stranger to moonshots.
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In addition to EVs, robots, and self-driving cars, Musk has now set his designs on bringing a new AI chip design to “volume production” on an annual basis.
“We expect to build chips at higher volumes ultimately than all other AI chips combined,” declared the CEO at the end of November.
The market was clearly impressed with the bold assertion, and TSLA’s share price has increased by double digits over the past few weeks.
Not everyone shares the excitement, however. Count top investor James Foord among the unconvinced.
“I’m afraid Tesla, under the guidance of Elon Musk, is jumping at every new shiny AI trend, and this won’t end well,” explains the 5-star investor, who is among the top 2% of stock pros covered by TipRanks. “As an investor, this is where I completely lose patience.”
On its face, Foord believes that this plan is simply “detached from reality.” The investor notes that industry leader Nvidia has development cycles that are closer to 18 to 24 months, which are supported by thousands of engineers, decades of technology development, and deeply entrenched partnerships.
Tesla has nowhere near that level of infrastructure, points out Foord. And it’s not just the technical issues, but the finances as well. For instance, he points out that Nvidia spends billions every year on R&D and capex to remain at the top of the industry. Foord reminds investors that Tesla’s margins have been falling, and the company’s cash is already being deployed to support robotaxis and robots, among other initiatives.
“While Musk’s dream keeps expanding, Tesla’s execution simply cannot match this ambition,” adds Foord.
The investor argues that the company needs to settle on a clear strategy, believing that Tesla must choose between being a high-volume EV maker or an AI and robotics platform. Either of these paths would demand “intense focus and enormous resources.”
Adding yet another ambitious objective, concludes Foord, is simply too much.
“Tesla is out of its depth in AI, lacks strategic focus, and is no longer a company I can be bullish on,” sums up Foord, who ranks TSLA a Sell. (To watch James Foord’s track record, click here)
Wall Street presents a murky picture, with analysts very torn regarding TSLA’s prospects. With 12 Buys, 12 Holds, and 10 Sells, TSLA carries a Hold (i.e., Neutral) consensus rating. Its 12-month average price target of $383.54 implies losses in the low teens in the year ahead. (See TSLA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.