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The race is on to become the world’s first $10trn company, and a good few investors are betting on Tesla (NASDAQ: TSLA) to lead the US stock market.
AI chip maker Nvidia is probably most people’s favourite to set the record. With a market cap right now of over $4.5trn, it’s almost halfway there. And Google owner Alphabet is up over the $4trn mark too — though only just.
With a market cap of under $1.5trn, Tesla has the lowest valuation of the Magnificent Seven Nasdaq stocks. So it has a bit of catching up to do before it can hope to outpace its rivals. But a few people think it can do it.
CEO Elon Musk is one of them, following his huge pay package approved at November’s company AGM. If he can hit the targets he’s been set over the next 10 years, that would push the value of the company up to around $8.5trn.
Ark Invest CEO Cathie Wood is possibly the most ambitious shareholder there is right now. She famously has a $2,600 price target on Tesla shares — which would bring the company close to Musk’s goals. And what’s more, she sees a chance Tesla could make it as soon as 2029. If that comes off, it surely wouldn’t take much more to break through $10trn.
Way more than cars
If Tesla can achieve anything close to this level of growth, a few new technologies will need to boom. First is autonomous driving and robotaxis. And if we turn back to Cathie Wood, she’s floated the idea of an early potential robotaxi market size of over $1trn. She also predicted it could eventually hit $10trn, and that Tesla has a strong chance of dominating the business.
Against that optimism, Tesla’s trial rollouts haven’t exactly taken the world by storm yet. And the company is facing stiff competition from Alphabet’s Waymo.
Musk himself is pinning his hopes for Tesla growth on the company’s Optimus robots. He reckons robots could outnumber humans by 2024, and says Optimus could generate $10trn or more in revenue.
Back on Earth
Meanwhile, there’s one key thing that might count against any quick stock price rise for Tesla. And that’s valuation, with an expected 2025 price-to-earnings ratio at a sky-high 340. It’ll take some going to get that down close to the rest of the Mag Seven.
Am I going to stake any money on Tesla’s chances of making it as the most valuable company that’s ever existed? In short, no. But that’s mainly because I can’t hope to quantify what future profits might be like. And at times like that, I don’t go for it.
But for investors who can see beyond the boring bottom line, the chance could be one to consider taking.
