A Once-in-a-Generation Investment Opportunity: 1 Artificial Intelligence (AI) Stock to Buy Now and Hold Forever This April | The Motley Fool (2024)

All eyes are on Tesla's production volume. But the company is making inroads in many AI-powered applications that appear overlooked right now.

Excitement surrounding breakthroughs in artificial intelligence (AI) have led to major gains in the stock market over the last year. The tech-heavy Nasdaq Composite surged 43% in 2023, and is up 8% already so far this year.

Much of these gains, however, can be attributed to a small cohort of stocks collectively known as the "Magnificent Seven" -- a catchy moniker that includes Microsoft, Apple, Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla (TSLA -1.92%).

Interestingly, Tesla is the only member of the Magnificent Seven that has had a negative return over the last year, down nearly 11% as of market close on April 5.

As its megacap peers continue to push the AI narrative forward, Tesla's progress in artificial intelligence is going overlooked as demand for electric vehicles (EV) begins to cool. Let's break down why now is a lucrative opportunity to consider scooping up shares of Tesla and preparing to hold long-term.

More than a car business

The main knock against Tesla is that the company is nothing more than a car business. While producing a battery-powered vehicle differentiates Tesla from many legacy automakers, bearish investors will also contend that it's a costly endeavor.

Nevertheless, Tesla's financial and operating results prove that there is a big market for EVs. In 2023, Tesla generated $96.8 billion in revenue, up 19% year over year. Roughly 85% of the company's sales stemmed from the car business, with the remainder coming from Tesla's energy storage and services operations.

Considering that unusually high inflation and rising interest rates weighed on the economy throughout 2023, I see these results as quite impressive. More importantly, Tesla managed to consistently operate at a profitable level last year, despite a tough macro environment.

Tesla increased its net income by 19% last year, reporting $15 billion on a generally accepted accounting principles (GAAP) basis. And even though the company's $4.4 billion of free cash flow represented a 42% decline year over year, the more important point is that Tesla still remained in the green overall.

With more than $29 billion of cash on the balance sheet, let's explore some ways Tesla is building outside of EVs.

Rise of the robots

One of the more notable artificial intelligence (AI) projects Tesla is working on is in robotics. The company is developing a humanoid robot called Optimus, which it hopes to implement into factories in the long run.

The primary selling point is that factories operated by Optimus bots can achieve a new level of automation productivity. But a bigger goal concerns the labor industry. Should Tesla begin commercializing Optimus, humanoid robotics have an opportunity to upend manufacturing, logistics, retail, and more.

While a world integrated with humanoid robots may feel akin to science fiction, it's worth noting that many other AI enterprises are also investing in the technology. For example, Nvidia joined Jeff Bezos and Intel earlier this year in a $675 million funding round for a start-up called Figure AI, which competes with Tesla's Optimus. Moreover, ChatGPT developer OpenAI is invested in both Figure AI and an android start-up 1X.

Goldman Sachs forecasts a $38 billion addressable market for humanoid robotics by 2035. I wouldn't sleep on this opportunity given Tesla's early entrance in the space. Furthermore, with a $42 trillion labor market, Tesla has a greenfield opportunity to leverage robotics by augmenting its core car business and expanding outside of EV production.

A billion miles of data and counting

Another opportunity where AI can play a role for Tesla is autonomous driving. There are a lot of companies investing in self-driving capabilities, but not many have made measurable progress.

Over the last several months, a subsidiary of General Motors called Cruise faced significant hurdles in its autonomous driving roadmap. By contrast, Alphabet's self-driving car business Waymohas attracted the likes of Uber for potential partnerships down the road.

But with more than 1 billion miles of data collected, Tesla has an edge over the competition. The company is the undisputed leader in self-driving data collection, which it uses to hone and train its autonomous driving software models.

Right now, Tesla stock trades at price-to-sales (P/S) ratio of just 5.9 -- the second lowest among the Magnificent Seven. With shares down 34% so far in 2024, it's hard to imagine things getting much worse.

Long-term investors should not discount the AI vision Tesla is creating beyond selling cars. The company is very much in the midst of the AI revolution -- but with all eyes on car sales, investors are overlooking Tesla's long-term opportunities. I think now is a terrific time to scoop up shares and buy the dip in Tesla stock.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Tesla, and Uber Technologies. The Motley Fool recommends General Motors and Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $25 calls on General Motors, long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.

A Once-in-a-Generation Investment Opportunity: 1 Artificial Intelligence (AI) Stock to Buy Now and Hold Forever This April | The Motley Fool (2024)


What is the best AI stock to buy right now? ›

7 best-performing AI stocks
TickerCompanyPerformance (Year)
NVDANVIDIA Corp221.39%
SYMSymbotic Inc53.19%
UPSTUpstart Holdings Inc46.67%
PRCTProcept BioRobotics Corp41.03%
3 more rows
Apr 17, 2024

Are AI stocks a good investment? ›

AI stocks are on a roll as investors have been reacting to signs that demand for the technology is at the start of a long period of growth. Since the beginning of 2023, AI-connected stocks have delivered 30% better returns than both U.S. and global indexes.

What is the $3 AI wonder stock? ›

SoundHound AI is a technologically advanced platform developed by SoundHound Inc., a company specializing in sound recognition and voice search. The primary focus of SoundHound AI is to enable computers and devices to comprehend and engage with sound, music, and voice inputs effectively.

What company is investing in OpenAI? ›

Microsoft invested $1 billion in OpenAI in 2019 and committed another $10 billion to the AI innovator in 2023. The partnership deepened along the way, as Microsoft added OpenAI's tools to its Azure cloud-computing service, to its Bing search engine, and to its Edge browser.

What are the top 3 AI stocks to buy now? ›

Best Performing AI Stocks
  • Symbotic (SYM).
  • MicroStrategy (MSTR).
  • Nvidia (NVDA).
  • C3. ai (AI).
  • Meta Platforms (META).

Which company is number 1 in AI? ›

Largest AI companies by market capitalization
1Microsoft 1MSFT🇺🇸
3Alphabet (Google) 3GOOG🇺🇸
4Meta Platforms (Facebook) 4META🇺🇸
43 more rows

Which AI stock has the most potential? ›

Nvidia (NVDA)

Is anyone even remotely surprised that Nvidia (NASDAQ:NVDA) is on a list of the best AI stocks with long-term potential? The company is one of the biggest winners of the AI revolution.

What are the best AI stocks for February 2024? ›

The most popular AI-focused stocks on the NYSE or the Nasdaq for February 2024 include Phunware, Tesla, Advanced Micro Devices, Ford, and SoFi.

Can you really make money with AI? ›

The amount of money you can make using AI depends on the product or service you offer. Generally speaking, complex methods like developing your own AI-based products can bring more money than monetizing AI-generated blog posts.

Can I buy OpenAI stocks? ›

Can you buy OpenAI's stock? OpenAI is not publicly traded on NYSE or NASDAQ in the U.S. To buy OpenAI's stock you need to be an accredited investor. Learn more about how to invest in the private market or register today to get started.

What is the price prediction for AI stock? ›

AI Stock 12 Month Forecast

Based on 13 Wall Street analysts offering 12 month price targets for C3ai in the last 3 months. The average price target is $30.55 with a high forecast of $40.00 and a low forecast of $20.00. The average price target represents a 42.29% change from the last price of $21.47.

What is the future price of AI stock? ›

(AI) have a share price target of $29.73. This median of share price forecast represents a 43.48% upside from the latest price of $20.72 as on 22.04.

Which is the best AI model for stock prediction? ›

AI-based high-frequency trading (HFT) emerges as the undisputed champion for accurately predicting stock prices. The AI algorithms execute trades within milliseconds, allowing investors and financial institutions to capitalize on minuscule price discrepancies.

What is the most advanced AI on the market? ›

Essentially, Jasper serves as one of the most advanced AI assistants, particularly beneficial for content marketers and business owners seeking to create original content rapidly. One notable feature of Jasper is its capacity to generate unique content without plagiarism.

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