Analyst Says Tesla (TSLA) Stock Alpha is ‘Exponential’ If Elon Musk Does This
We recently published Top 10 Trending Stocks to Watch Ahead of Nvidia Earnings. Tesla Inc (NASDAQ:TSLA) is one of the top trending stocks to watch ahead of Nvidia earnings.
Daniel Newman, Futurum CEO, said in a program on CNBC last month that Tesla Inc (NASDAQ:TSLA) CEO Elon Musk is back in “founder mode,” but there’s a lot of uncertainty among the EV maker’s investors amid his political involvement and tweets. Newman said the company will see a “big fall” in earnings and revenue, but sees “exponential” alpha for the stock if Musk does the “right thing.”
“The valuation is eye-watering. It’s really hard to get behind and it’s so much higher than everything else in the Mag 7. But at the same time, if he’s back, if he’s fully committed, but the investors are so scared of another tweet about the America’s party or him deciding to go on the campaign trail again, and you can see that volatility. So, I’m just kind of looking at them out in their own space. You have to have that appetite for discomfort and uncertainty, but the alpha there, the potential, if he says the right thing, does the right thing, is exponential.”
Photo by Michael Fousert on Unsplash
Tesla’s EV sales are falling all over the world as the company faces challenges from competitors. Even if Elon Musk increases his focus to fix the company’s problems, it would take a lot of effort to come out of the demand crisis. For example, in California, the largest U.S. market for electric vehicle adoption and sales, Tesla sales fell about 12% year over year in 2024, causing its market share to drop from 60.1% in 2023 to 52.5% in 2024. Was it because Californians are buying fewer EVs? No. Californians purchased more than 2 million electric cars during the year, almost double when compared to the past two years.
Macquarie Large Cap Growth Fund stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q1 2025 investor letter:
“At the individual stock level, the greatest contribution was attributable to not owning Tesla, Inc. (NASDAQ:TSLA), and our positions in Intercontinental Exchange Inc. (ICE) and Visa Inc. Tesla faced well-publicized headwinds last quarter that may bleed into future periods. This has remained a constant stock of debate among the investment community and is volatile as a result. The business has never met our quality standards and we are happy to sit on the sidelines of this battleground stock.”
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 have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.