The term "Magnificent Seven" is a nickname for the world's leading technology giants: Microsoft, Apple, Nvidia, Amazon, Alphabet, Meta Platforms, and Tesla. Tesla seems somewhat out of place in this roster, mainly due to the challenges it has faced from high inflation and rising interest rates recently. While these economic conditions show signs of improving, Tesla's stock experienced a significant sell-off following an underwhelming Robotaxi reveal earlier this month. With the anticipation of Tesla’s third-quarter earnings report set for October 23, expectations are notably high.
Currently, Tesla is not in an ideal situation. However, as a long-term investor, I'm more interested in the company's future potential. I will explain why I believe Tesla remains an attractive investment opportunity and why this moment may be a good chance to purchase shares. Tesla CEO Elon Musk has long promoted the company's advancements in artificial intelligence, particularly in autonomous driving and robotic technology. Musk has a talent for storytelling, but there's no certainty that Tesla will succeed in mastering these technologies. Disappointment set in after the recent Robotaxi event, revealing limited autonomous performance.
The humanoid robot, Optimus, showcased some interesting but not entirely practical applications like serving drinks and dancing. Consequently, investors were left underwhelmed, contributing to Tesla's declining stock value. Despite this, I appreciate Musk's frankness. In Tesla's Q2 earnings call, he advised investors skeptical of Tesla’s AI vision to sell their stock, a stance he is likely to reiterate in the Q3 call. This suggests Musk believes in the long-term potential of Tesla’s AI-driven efforts, focusing on fields poised to be worth trillions in the future. Musk has even described Optimus’s potential as a $200 trillion opportunity.
Expectations for the Robotaxi event may have been unrealistic, and part of the fault lies with Musk's optimistic projections. The recent stock dip appears to result from emotional responses rather than logical assessment. Despite not being as advanced as some might wish, Tesla remains a leader in autonomous and robotics technologies, continually progressing without slowing down. Next week’s earnings call will likely feature Musk's candid remarks as he addresses Wall Street analysts’ inquiries about the timeline for commercializing self-driving vehicles and Optimus at scale.
While a game-changing announcement during the call is improbable, the possibility of further stock declines remains if expectations are unmet. Nevertheless, Tesla's strategic focus on long-term AI development suggests a cautious approach to product releases. Currently, other technology giants among the Magnificent Seven may seem better positioned, yet I view current dissatisfaction as an opportunity to enhance my investment in Tesla. Instead of focusing on today's challenges, Tesla shareholders should consider the company's growth trajectory years from now.
