Anticipation: The Shares of this Artificial Intelligence (AI) Company are Expected to Soar Exponentially Following Trump's Inauguration as President
Anticipation: The Shares of this Artificial Intelligence (AI) Company are Expected to Soar Exponentially Following Trump's Inauguration as President
Following a high-intensity election period, ex-President Donald Trump is set to return to Washington. Post-election, there's been significant chatter about who Trump will choose for his cabinet or other prominent roles.
Prominent speculation centers around Elon Musk, CEO of Tesla (TSLA), who proved to be a vital Trump supporter throughout the campaign's later stages. Regardless of whether Musk assumes the nebulous Department of Government Efficiency, I'm more concerned with Tesla's future under the Trump administration and the impact this new Washington leadership will have on the company.
Here's why I believe Tesla's stock is primed for a surge as Trump's inauguration in January approaches.
What's Wall Street saying?
Known for his fearless and assertive predictions, Dan Ives of Wedbush Securities is one of Wall Street's most influential technology analysts. He shares similarities with Ark Invest's Cathie Wood due to his bold opinions.
In a recent chat with CNBC's Scott Wapner, Ives declared that a Trump administration would serve as a "game-changer" for Tesla.
Although it seems daring to advocate for a Trump White House before he's even sworn in, Ives might be onto something.
How a Trump administration could help Tesla
Over the last few years, Musk has spent time educating investors on Tesla's evolution from a car manufacturer to a more robotics and AI-focused entity.
A major focus in Tesla's AI strategy is the development of autonomous driving. If Tesla succeeds in delivering widespread autonomous vehicles, it will likely leave other automakers struggling to catch up. As a result, Tesla might see an increase in consumer demand for its vehicles. On the business side, a Tesla robotaxi fleet could pique interest from ride-hailing services, car rental companies, and delivery services.
While it's difficult to predict with accuracy, it's safe to assume that some influence from Trump's administration will aid Tesla in navigating regulatory hurdles to commercialize its full self-driving technology. According to Ives, Tesla's autonomous opportunity could significantly accelerate under the Trump administration.
Should you invest in Tesla stock now?
I'm conflicted about whether buying Tesla stock now would be a smart move.
Autonomous driving technology promises substantial monetary rewards. Tesla's FSD software offers recurring revenue, which should lead to enhanced margins and stronger cash flow for the company. In theory, this could result in Tesla's valuation soaring. Ives' recent price target of $400 implies a 25% increase from Tesla's current share price.
However, it's essential to remember that Tesla's stock has gone up nearly 30% since Election Day. Purchasing momentum stocks is generally risky, as it's likely that day traders will ultimately search for other investment opportunities. Unfortunately, this isn't always apparent until a dramatic sell-off occurs.
While some of the optimism around the Trump-Musk relationship might be reflected in Tesla's stock price, there's still a case to be made for investors to buy shares today.
However, I'd urge investors to avoid becoming too enthralled by the excitement. While I hope that a Trump White House will be beneficial for Tesla and its investors, I believe the wisest strategy is to exercise caution and patience for now.
In light of Dan Ives' assertion that a Trump administration could serve as a "game-changer" for Tesla, some investors may consider investing in Tesla stock due to the potential regulatory aid in commercializing its full self-driving technology. However, given the stock's recent upward momentum and the unpredictability of market trends, it's crucial to approach investing with caution and patience.
Given Elon Musk's focus on Tesla's transformation into a robotics and AI-focused entity, as well as the potential for a Tesla robotaxi fleet to attract interest from various service industries, investing in Tesla could yield significant financial returns if autonomy becomes widely adopted in the automobile industry.