Technology stocks have gotten off to a rough start so far in 2025. As of this writing, the Nasdaq Composite is down 8% on the year.
Among the Nasdaq’s biggest laggards are the “Magnificent Seven” stocks, six of which are down on the year (Meta Platforms being the lone exception with just a 3.8% gain on the year).
Within the Magnificent Seven, one stock stands out among the pack: electric vehicle (EV) manufacturer Tesla(NASDAQ: TSLA). With shares down 44% in 2025 as of Tuesday’s market close, Tesla is fighting a host of issues — from damage to the brand’s reputation, rising competition in the EV space, and decelerating operating results.
Nevertheless, respected Wedbush Securities research analyst Dan Ives recently said that taking advantage of the sell-off in Tesla stock right now could be a “generational opportunity.”
Let’s explore the current state of affairs at Tesla and then dive into the ideas that have some on Wall Street seeing epic catalysts for Tesla’s future.
Tesla reports its financial figures across three major categories: automotive, energy generation and storage, and services. For the most part, Tesla investors tend to hone in on the automotive segment.
While I’m a Tesla shareholder and remain bullish on the company’s future, I must admit that the company’s performance in 2024 was uninspiring. The company generated $77 billion in revenue from the automotive segment, which represented a decline of 6% year over year. On top of that, gross profit margin for the EV business dropped to 18.4% for the full year from 19.4% in 2023.
Despite this sluggish growth profile, some on Wall Street seem to think the EV business is poised for a turnaround thanks to Tesla’s aggressive investments in artificial intelligence (AI).
Electric vehicle production line; not Tesla. Image source: Getty Images.
Tesla is exploring AI for two core features.
The first involves autonomous driving. Tesla is aiming to generate sales from autonomous driving software across a couple of applications. The first is that existing Tesla owners would purchase a subscription to the company’s autonomous driving software, full self-driving (FSD).
However, the more lucrative FSD opportunity revolves around the company’s vision to build a fleet of autonomous vehicles to serve as robotaxis. These vehicles could potentially disrupt several end markets including ride hailing, delivery and logistics services, and car rentals. Considering FSD will be a subscription service, Tesla has an opportunity to generate billions in profit from high-margin recurring sales.
The second major AI opportunity for Tesla is its humanoid robot, Optimus. Tesla’s vision is to integrate Optimus in factories, augmenting human workers along the assembly line. As Optimus scales and becomes more integrated with the manufacturing process, Tesla may be able to generate efficiencies from reduced labor costs — thereby increasing its unit economics on each vehicle produced.
I think the sell-off in Tesla looks worse than it really is because the stock was trading at all-time highs back in December. Pulling back to look at the stock’s six-month performance shows a small gain.
TSLA data by YCharts
Although Tesla’s core EV business is currently in a tough spot operationally speaking, the financial results I explored above could have been much worse. Let’s remember, 2024 was a pretty tough year for the economy as consumers and businesses faced lingering impacts of inflation.
If you are interested in buying the dip in Tesla right now, the long-term thesis is not simply that the EV business will start to grow again. To me, the bull outlook for Tesla is more nuanced. Namely, an investment in Tesla today requires a conviction that Musk and his team will pull off their vision of commercially available autonomous vehicle fleets in combination with an enhanced labor force underscored by robotics. Taking this one step further, both of these AI ambitions have the opportunity to not just to reignite sales, but, more importantly, widen Tesla’s profit margin to a degree unmatched by the competition.
At the end of the day, I am aligned with Ives in that now is a good time to scoop up shares of Tesla stock. With that said, I would not be surprised if shares witness further near-term headwinds. Tesla is a heavily volatile stock — it always has been. But in the long run, it’s been a great name to own overall. I see AI as the next chapter in Tesla’s history and think long-term investors should consider taking advantage of the ongoing sell-off right now.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Meta Platforms, Nvidia, and Tesla. The Motley Fool has positions in and recommends Meta Platforms, Nvidia, and Tesla. The Motley Fool has a disclosure policy.
Dan Ives Just Said Buying the Dip in This Artificial Intelligence (AI) Stock Is a “Generational Opportunity” (Hint: It’s Not Nvidia) was originally published by The Motley Fool
Shelley Larkin is a news writer for Canary Islands News. She writes about arts, construction, automotive, travel, real estate, and fashion. She is also interested in sports and movies.
Shelley enjoys spending time with her family and friends, listening to music and going to the movies.
