Tesla Stock 'Could Fall 90% Tomorrow,' Fund Manager Still Won't Buy — Here's Where He's Investing Instead

T. Rowe Price fund manager David Giroux, whose Capital Appreciation Mutual Fund boasts an 11.9% average annual return over 15 years, asserts that Tesla (TSLA) is "crazy overvalued" at a ~200 P/E ratio and could fall 90%. He similarly avoids Palantir (PLTR), Costco (COST), and Walmart (WMT) due to their high valuations. Giroux instead favors investments in healthcare and utilities, alongside specific innovation plays like autonomous trucking firm Aurora Innovation (AUR), while his managed ETFs maintain significant allocations to tech leaders such as Microsoft and NVIDIA.

Analysis

Prominent T. Rowe Price fund manager David Giroux, whose Capital Appreciation Mutual Fund has outperformed 99% of its peers with an 11.9% average annual return over 15 years, has issued a stark warning on Tesla (TSLA), stating the stock is "crazy overvalued" and could fall by 90%. This perspective is grounded in Tesla's price-to-earnings ratio of approximately 200, which stands in contrast to the stock's 8% year-to-date decline in 2025 and a recent quarter where both revenue and earnings fell short of expectations. Giroux's valuation discipline extends to other growth and retail names, specifically identifying Palantir (PLTR), Costco (COST) at 49 times earnings, and Walmart (WMT) at 37 times earnings as stocks he avoids due to excessive valuations. As an alternative, Giroux is channeling capital into the healthcare and utilities sectors, with favored picks including UnitedHealth Group (UNH), Becton Dickinson (BDX), and NiSource (NI). Notably, he offers a specific, non-Tesla play on autonomous vehicles through Aurora Innovation (AUR), citing its "massively compelling" economics in autonomous trucking. While cautious on specific high-flyers, Giroux's strategy is not broadly anti-technology, as his T. Rowe Price Capital Appreciation Equity ETF (TCAF) maintains significant top holdings in mega-cap tech leaders such as Microsoft (9.6% of assets), NVIDIA (7.0%), and Amazon (7.0%), indicating a selective approach focused on fundamental value within the sector.

Key Decisions for Investors

• Investors with positions in Tesla, Palantir, Costco, or Walmart should scrutinize their valuation theses, as a top-quartile fund manager has explicitly identified these stocks as significantly overvalued and is avoiding them.
• Consider reallocating capital towards defensive growth sectors like healthcare and utilities, exemplified by Giroux's preference for companies such as UnitedHealth Group (UNH), Becton Dickinson (BDX), and NiSource (NI).
• For exposure to the autonomous vehicle theme, evaluate pure-play alternatives to Tesla such as Aurora Innovation (AUR), which Giroux highlights for its superior asset utilization economics in the trucking industry.
• Note that a value-oriented approach does not require exiting the technology sector entirely; Giroux's substantial ETF allocations to Microsoft, NVIDIA, and Amazon suggest a strategy of selective ownership in mega-cap tech leaders with strong fundamentals.