Once-in-a-generation investment opportunity: Cathie Wood says you should buy 1 artificial intelligence (AI) stock before it soars 1,068%

One of the most outspoken investors on Wall Street is Ark Invest CEO Cathie Wood. Ms. Wood is known for taking large positions in emerging technology businesses that she and her team believe have significant upside potential. But like her other wealth managers, Wood has faced backlash and skepticism.

I’ll admit that some of Wood’s chances of conviction look outrageous to me. But to be fair to her, one thing that Wood does differently than many others is that she publishes her own research. So, while you may not agree with her opinion, at least she is backing up her predictions by making them public.

Mr. Wood’s largest position in all exchange traded funds (ETFs) is tesla (TSLA -4.62%). The stock was valued at $170 per share as of market close on April 25, but Wood believes it could reach $2,000 by 2027, an increase of about 1,068% from current trading levels. It suggests that.

Let’s take a closer look at Wood’s report and evaluate Tesla’s long-term roadmap. While $2,000 per share may seem like a lot, we encourage investors to keep an open mind. There’s a lot to uncover, and buying Tesla stock now could end up being an incredibly lucrative move.

Is Tesla just a car company?

One of the biggest debates surrounding Tesla is whether it’s just a car maker or something much more prolific. Technically speaking, Tesla is more than just a car business; it also offers energy storage products separate from its core electric vehicle (EV) business.

But Tesla bulls will dispute that the company is more advanced than its automaker peers. In short, the long-term optimism surrounding Tesla is that the company is disrupting artificial intelligence (AI) in a number of ways.

Cathie Wood thinks so, and Tesla CEO Elon Musk supports her. “But I think Cathie Wood said it best: We should be thought of as an AI or robotics company, just like in real life,” Musk said during the company’s first-quarter earnings call. Let’s see what that means.

Artificial intelligence (AI) is the catalyst

There are two major ways Tesla is investing in AI. First, the company is in an advantageous position in self-driving technology.meanwhile general motors and alphabet Both companies compete in the self-driving car space, but Tesla is considered the leader. This is because Tesla collects more driver data than other competing self-driving car platforms.

The opportunity that Wood and Musk ultimately see as the pinnacle of Tesla’s self-driving technology is what the company calls robotaxis. The robotaxi concept is particularly lucrative because Tesla could benefit in several ways.

For example, self-driving car software not only generates revenue from additional car sales, but also becomes a recurring revenue stream. This is a subtle but significant step forward for Tesla, as the software offers high profit margins and could open up a new phase of revenue and profit growth for Tesla.

Additionally, if Tesla becomes the first car company to commercialize self-driving at scale, there’s a good chance competing automakers will consider licensing Tesla’s technology. In fact, during the first quarter earnings call, Musk hinted that Tesla was “in discussions with one major automaker regarding licensing.” [full self-driving] F.S.D. ”

Self-driving cars are likely still years away from widespread adoption, but I don’t mean to discount Tesla’s position here. In fact, investors could be in for a big robotaxi surprise this summer.

The second pillar of Tesla’s AI ambitions is humanoid robots. Tesla has invested a lot of money into a humanoid robot called Optimus over the years. Over time, these robots will learn how to perform tasks and be able to assist humans. For Tesla, the obvious use case here is to integrate Optimus into factories to help workers complete manufacturing processes more efficiently.

Again, this may seem like a nominal feat, but the benefits from more efficient warehouse operations add up to significantly reduce costs in the long run as more cars are produced. This can lead to savings and increased revenue. Similar to Tesla’s self-driving software, Tesla could have an opportunity to sell Optimus to other companies that rely heavily on human labor.

Optimus is Musk’s most bullish product. In fact, he told investors, “I think Optimus is worth more than everything else combined.” And while humanoid robots may seem like a far-off and lofty goal, Musk hinted that Optimus could be in Tesla factories in some capacity by the end of the year.

Should you invest in Tesla stock?

So will Tesla reach $2,000 per share within the next three years? I can’t say for sure. The bigger idea is that Tesla is evolving from his EV business to an AI services company. Robotaxis and Optimus could take Tesla into a whole new category beyond EVs.

Given that the AI ​​revolution is still in its early stages, I’ll be keeping an eye on Tesla. Optimus and self-driving capabilities could become a reality sooner than most investors expect. As such, I expect the company’s valuation to rise significantly once it realizes its autonomous driving and robotics ambitions.

Investors should adopt a long-term perspective when considering positions. However, with the stock price down about 30% by 2024, we think investors have a unique opportunity to buy on the edge now and take advantage of Tesla’s under-the-radar AI themes within Tesla.