The Best AI Stock to Buy Right Now, According to a Wall Street Analyst (Hint: Not Nvidia or Palantir)

Wedbush analyst Dan Ives identifies Tesla as the most undervalued AI stock, forecasting a $3 trillion market cap based on its substantial opportunities in autonomous driving and robotics. This bullish outlook contrasts with Tesla's recent loss of EV market leadership to BYD and weak Q2 financial results, as well as its current high valuation at 178x 2026 earnings. However, Ives emphasizes Tesla's scalable vision-only autonomous ride-sharing and the Optimus humanoid robot as key future growth drivers, positioning the stock as a high-risk, high-reward play dependent on its successful pivot to physical AI.

Analysis

The investment thesis for Tesla (TSLA) is bifurcated, pitting deteriorating fundamentals in its core electric vehicle (EV) business against a long-term, high-risk narrative centered on artificial intelligence. The company's automotive segment is showing clear signs of stress, having lost its global EV leadership position to BYD and seeing its market share fall from 18% to 12% year-to-date. This is reflected in its Q2 results, with revenue declining 12% to $22 billion and non-GAAP net income dropping 23% to $0.40 per share. Data from July and August signals continued weakness, particularly in Europe and China. In stark contrast, a bullish camp, led by Wedbush analyst Dan Ives, views Tesla as the "most undervalued true AI play," forecasting a potential $3 trillion market cap based on its autonomous ride-sharing and Optimus robot initiatives. This perspective largely dismisses the current challenges and the stock's high valuation of 178 times projected 2026 earnings. The consensus view, however, remains skeptical, with a median analyst price target of $349 suggesting 21% downside from its current price, highlighting the deep division between valuing Tesla on current performance versus its speculative future.

Key Decisions for Investors

• Investors must decide whether to value Tesla on its present, weakening EV fundamentals or on its long-dated, speculative potential in AI and robotics, as the two narratives imply starkly different outcomes for the stock.
• Given the median analyst price target implies 21% downside and the stock trades at 178x projected 2026 earnings, risk-averse investors should consider the significant near-term risks stemming from declining market share and sales.
• For long-term, risk-tolerant investors who subscribe to the physical AI thesis, the current weakness in the core automotive business could be viewed as a strategic entry point, but positions must be sized to withstand high volatility and a prolonged period before the AI ventures generate material revenue.
• Monitor key non-automotive metrics for thesis validation, including the geographic expansion and service area of the autonomous ride-hailing network and any concrete milestones related to the production and deployment of the Optimus robot.