Tesla bulls believe the electric vehicle maker is far more than just a car company. Tesla bears disagree, of course, pointing out the vast majority of its profit comes from selling EVs.
Based on Tesla’s growing list of competitors, the bulls are winning. That doesn’t mean it’s clear sailing for Tesla stock, though. The new competitors are formidable.
Friday, Bloomberg and Reuters reported that Meta Platforms was investing in humanoid robots. Sunday, Bloomberg added that Apple was working on humanoid robots, too.
Meta and Apple didn’t immediately respond to a request for comment.
Tesla has been working on those since a person in a robot costume danced on stage at an artificial intelligence showcase in 2021.
The thing that links Meta, Apple, and Tesla in robotics is AI, which is getting good enough to train cars to drive themselves as well as or better than humans and train humanoid robots to do things humans would prefer not to do.
“I think most people, if not everyone, would probably like to have their own personal C-3PO or R2-D2,” said Tesla CEO Elon Musk at a talk during January’s Consumer Electronics Show, making a reference to the Star Wars characters. “Humanoid robots [can] be the biggest product ever in history by far.”
Musk is famously optimistic about his predictions. Another notable CEO, however, agrees. Nvidia CEO Jensen Huang said during his CES presentation that the “robotics era” is just around the corner, and robotics, including both self-driving cars and humanoid robots, could be the ” largest technology industry the world has ever seen.”
For investors, the Meta and Apple revelations are about risk and reward. Both companies are huge, well capitalized competitors. That might make Tesla shareholders a little nervous. Their participation, however, makes it more likely that a large robot business really is right around the corner for Tesla and others.
According to Musk, Tesla is planning to produce several thousand robots in 2025, multiply that by 10 times in 2026, and by 10 times in 2027. That implies a 2027 robot production of some 500,000 units. At $20,000 per copy — a Musk goal — that’s a $10 billion business.
Robotics revelations put dents in one of the bear cases in Tesla stock. It really seems to be more than a car company. Bears can still take issue with valuation. Tesla stock trades for about 120 times estimated 2025 earnings. Meta stock trades for almost 30 times. Apple and Nvidia shares fetch about 32 times.
All of those multiples are way better than car stocks. Ford Motor and General Motors shares trade for about 7 times and 4 times estimated 2025 earnings, respectively.
Hyundai Motor, which owns robot maker Boston Dynamics, trades for about four times estimated 2025 earnings. Investors don’t seem to value robots they same way they do robots plus AI.
Through Friday trading, Tesla stock was up about 78% over the past 12 months. The S&P 500 and Dow Jones Industrial Average were up about 22% and 15%, respectively.