Cathie Wood appears to have exclusive insights, as evidenced by her continued investment in one autonomous taxi stock, which Wall Street seems unaware of.
Tesla's Autonomous Ambitions: Ark Invest Bets Big on Musk's AI Vision
Tesla, the trailblazing electric vehicle (EV) and energy storage solutions company, is making grand promises to disrupt the AI realm, particularly through innovations in autonomous driving. The latest development comes from Tesla's second-quarter earnings call, where CEO Elon Musk proclaimed that Tesla is aiming to have autonomous ride-hailing in half of the U.S. population by the end of the year.
Tesla's foray into self-driving vehicles is not a departure from its core business, but rather an extension of it. The company is introducing autonomous vehicles to the Tesla ecosystem as a service, primarily within consumer-purchased vehicles and through the creation of a robotaxi fleet. This move is expected to scale significantly during the second half of 2025.
However, Tesla does not fit neatly into the traditional automaker category and is not purely a technology business. Its unique positioning is reflected in Ark Investment Management's recent buying spree of Tesla stock. Over the last few weeks, Ark Invest added a total of 318,275 shares of Tesla, spread across the Ark Innovation, Ark Next Generation Internet, and Ark Autonomous Technology & Robotics exchange-traded funds (ETFs).
Cathie Wood, CEO and chief investment officer of Ark Investment Management, views Tesla as a long-term growth story driven by its leadership in AI and robotics, autonomous driving with its Dojo supercomputer, and vertical integration advantages beyond just electric vehicles. Ark's long-run price target for Tesla stock is $2,600.
Despite decelerating profitability, Tesla's stock trades on narratives beyond traditional valuation fundamentals. This is evident in its expanding P/E multiple, as shown in the chart above by YCharts. Some growth investors are not pricing Tesla for what the company is today, but rather for what it could become if Musk's AI vision is realised.
Tesla's robotaxi business faces competition from Alphabet's Waymo, Uber Technologies, and various partnerships. However, the potential financial impact of AI is expected to take time to materialise. The robotaxi rollout is expected to take time before AI begins to move the needle financially for Tesla.
Investors may have ample opportunity and more reasonable valuation levels to buy Tesla stock in the long run as it scales the robotaxi business. The success of this venture could potentially revolutionise the transportation industry, making Tesla a key player in the autonomous driving landscape.
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