Nvidia and Tesla are the most profitable companies, bringing out the stocks in the S&P 500 since 2020. The performance of the Nvidia stock has gone up 2,690% and Tesla by 1,010%. Much of this expansion is due to the emphasis that both companies had on artificial intelligence (AI).
It is perceived by the Wall Street analysts that now their rise is not completed yet. Beth Kindig in the I/O Fund considers that Nvidia might increase by 150% in 2030. Tasha Keeney at Ark Invest is of the view that Tesla would go up by 735% in the future to 2029.
Nvidia is the king of chipmakers, controlling the market of AI chips with a 90% market share of data centre GPUs. The chips are the brains of AI software to assist in powering tools such as ChatGPT and image generators. Nvidia is not limited to chips though. It is also a leader in AI networking equipment and is expanding its cloud services.
Not so long ago, CEO Jensen Huang remarked, we have long since ceased to think of ourselves as a chip company. In a larger vision the company wants to fuel the future of physical AI, such as self-governing robots’ cars and smart factories connected to physical reality.
Huang is confident that the world will soon be a place with billions of robots and millions of self-driving cars driven with the help of Nvidia technology. Analysts at TD Cowen estimate that Nvidia products will sell AI chips that will increase by 160% at the end of the decade. When that occurs, Nvidia will get back to the target price of Kindig of $410 per share. That would amount to an 18% annualized return which is not that bad but would then not be too remarkable especially when you consider that we are now seeing AI spending growing at a pace of 36% per annum.
Ark Invest believes that Tesla should focus on robotaxis to succeed in the future rather than on electric cars. Ark thinks that Tesla will get to the price of $2,600 per share by the year 2029 and robot taxis will contribute 63% of total revenues at this point. Tesla has a low-cost version of the self-driving car the company plans to launch which it calls a cyber cab because it is based on computer vision instead of the use of expensive lidar sensors.
A tremendous asset that Tesla possesses is information. Its vehicles generate a larger amount of road information compared to all the other manufacturers of cars. That puts Tesla ahead in training its AI models. Ark alleges that Tesla’s Full Self-Driving (FSD) software is already way safer than people and even waymo.
Tesla has opened the doors to this first robo taxi service in Austin, Texas. According to Elon Musk, robotaxis may become a significant revenue-generating asset well before the end of 2026.
He goes so far as to think that Tesla may take 99% of the robotics market share in the future. According to RBC Capital the market might reach $1.7 trillion in 2040. Nonetheless the future does not look so smooth. The electric car company of Tesla is losing. Its car deliveries have declined 13% this year, whereas sales of EVs globally have increased by 35%.
Part of this slump is attributable to an aged line of products and an increasing concern for the political activity of Musk. Meanwhile, the stock is priced at 170 times earnings which is a very high valuation. Ark is setting a very high goal where Tesla would have to increase profits by 60% annually until 2029 to achieve that target.
Final thoughts of Nvidia and Tesla are two companies leading in AI, but their futures are opposite. Nvidia is building the infrastructure for AI, software, and hardware. Tesla has staked its future on a dream of robotaxis that might take more time and have more competitors.
Although the two stocks are interesting prospects, people have to consider the risks of them. The aim of Nvidia might be more feasible and the prospects of Tesla occur because of achieving ambitious plans in a minimal period. AI is the future but the future of how each company will capture it is still in an embassy.
