Business
Tesla AI Day: An Investor’s Perspective
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Key Takeaways
- It’s worth mentioning that Tesla has generated much of its revenue from regulatory credits.
- The self-driving cars along with a retail version of the humanoid robot – a logical extension of the tech required of their cars – could change the business model of the company entirely.
- Elon Musk predicted that the humanoid robot would be ready within 3-5 years for less than $20,000 and that it would transform civilization.
- Musk reiterated many times how the public owns Tesla and that he can’t simply do whatever he wants, he could be fired, and the shareholding public always has a voice.
Tesla has been in the financial news for a variety of reasons over the last few months. There was a Tesla stock split, the company announced a recall, and the CEO Elon Musk is a constant source of buzz, a substantive Kardashian of science capable of space travel.
The celebrity CEO of Tesla, Elon Musk, enjoys putting on a show and garnering interest for the company. Unfortunately, the Tesla stock often feels the impact of Musk’s actions. However, Tesla just made some announcements that could change the landscape of artificial intelligence forever.
We’re going to look at what happened at Tesla AI Day 2022 to see what the news coming out of this event likely means for Tesla stockholders.
What was announced at Tesla AI Day?
They started the session off by having the humanoid robot come out to dance on stage. The Optimus is designed to be a highly capable robot ready for fully scaled production, and it could sell for less than $20,000 according to Musk. While this robot is still some years away from hitting the market, it appears that the company is optimistic about its potential. Tesla is already working on the next version of the humanoid robot.
The day was mainly produced to draw the world’s best minds in AI to join the team. Since the company is actively recruiting, the event got fairly technical and some of the information likely went over the heads of most investors.
The fully self-driving car is not yet ready for the market, but the company continues to work on it, including a computing framework that has moved the computing world forward with new chips and racks. The FSD Beta has many challenges, but the company is intent on making this happen. Once the fully self-driving car is ready for the market, the company can introduce its robot taxi service which would be a mix of Airbnb and Uber.
You can read our full recap from Tesla AI Day here if you’re interested in more.
What does this Tesla AI Day mean for investors really?
Investors paid close attention to Tesla AI Day to see what’s on the horizon for the electric vehicle maker. Tesla has been criticized in the past by some analysts for how much the company relies on regulatory credits for turning a profit. The company strives to be known for more than just “cool cars” as they bring continuous innovation to the AI space.
Here are a few key takeaways for Tesla investors…
Optimus has the potential to drastically change the market
Musk predicted that this robot could sell for less than $20,000 and be ready within 3-5 years. The robot would be an additional source of income along with changing the operations of the business, if it can perform advanced tasks for the company, from technical work to administrative duties.
Musk went as far as to say that the humanoid robot would be a “fundamental transformation for civilization,” which would undoubtedly bring more efficiency and attention to Tesla if it happens. We can only predict that bringing a humanoid robot to the market would increase shareholder value.
Additional revenue streams
Suppose the company is able to add a humanoid robot and a self-driving taxi service to its business model. In that case, we can only assume that this will significantly increase the company’s revenue. Adding new revenue streams that are profitable is always good news for investors.
There’s just no guarantee that the market, and general public, will be ready for a robot taxi service, assuming the company can get past the safety and regulatory hurdles.
Tesla also brought detailed insight into how it could lend its Dojo super chip to other companies for AI training, similar to Amazon Web Service, Tesla could sell compute time on a Dojo. We will be paying attention to see how this plays out but it’s a potential multi-billion dollar byproduct of building better AI that also drives an established industry forward faster.
Investors in Tesla stock would clearly benefit from new revenue streams. While many of us know Tesla for its electric vehicles, the company generates substantial revenue from selling its regulatory credits and energy storage. A big play in cloud computing could more than replace Tesla’s revenue from selling carbon credits. For context, Tesla didn’t turn a profit until 2022, largely kept afloat by selling its emissions credits. Recently, the energy side of the business has brought in more revenue with total energy revenue for Tesla reaching $2.78 billion for 2021. Unfortunately, this revenue stream had expenses of $2.91 billion which led to a $129 million loss for the sector.
The self-driving car could change the industry
The team at Tesla has come a long way with the full self-driving car as they have 160,000 beta testers, but the company still faces many regulatory hurdles and safety issues. If fully self-driving cars and a robot taxi service can hit the market, then this would sharply increase the company’s revenue.
Elon Musk could be fired
Musk made it clear that they could fire him since Tesla is publicly traded. This is important for investors because the CEO of a company plays a major role in the share price. While it doesn’t appear that Tesla will move forward without Elon Musk any time soon, it’s important for investors to be reminded of their role in deciding on the management team of the company. There’s no telling to what would happen to the share price of Tesla if Musk were to no longer be its public face.
With all of that being said, we have to stress that most of these innovations aren’t ready for the market yet. Companies like Apple use these showcase events to launch new products that are ready for market. In contrast, Tesla discusses products that are years away from being market-ready to recruit talent and build hype.
How should we be investing?
As an investor, it’s challenging to buy or sell based on hype and speculation, though it is a core capability of the best AI investing technology. Tesla’s AI Day certainly gave us a lot to get excited about AI across the board, but the company has a long way to go with many of these innovations.
This year has also been a rough one in the stock market as soaring inflation, persistent rate hikes from the Fed, and the fears of a recession have led to extreme volatility. The S&P 500 was down 9.3% for September, the largest monthly decline since March of 2020. This news is unsettling as a tumbling stock market impacts every company. We’re also going to see how Tesla’s demand changes during this time of high inflation where many folks are thinking twice about discretionary spending.
Another way to make money from Tesla and innovations in the AI space is to invest in one of our Kits. AI-powered Investment Kits take the guesswork out of investing. Our artificial intelligence searches the markets for the best investments for all manner of risk tolerances and economic situations.
Bottom Line
Musk is a controversial figure, to say the least, from announcing that he’s buying Twitter to then changing his mind on the deal with private text messages becoming public. All of this could impact Tesla stock, so you must pay attention to company-related news as an investor.
It’s no secret that Tesla believes in the future of artificial intelligence. It’s going to be worth watching to see how the company monetizes these future products when they’re ready to launch. A humanoid robot that’s available to regular citizens would certainly change the labor market and, in a very real way, the world. That’s not just hype if the team we saw at AI day delivers, but it’s difficult to get excited about something that has such a long way to go. In addition, we’re going to be tracking the financial performance of Tesla as the company has to deal with soaring inflation and global concerns of a recession.
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Tesla has promised to start selling cheaper models next year, days after a Reuters report revealed that the company had shelved its plans for an all-new Tesla that would cost only $25,000.
The news that Tesla was scrapping the Model 2 came amid a drop in sales and profits, and a decision to slash a tenth of the company’s global workforce. Reuters also noted increased competition from Chinese EV makers.
Tesla’s deliveries slumped in the first quarter for the first annual drop since the start of the pandemic in 2020, missing analyst forecasts by a mile in a sign that even price cuts haven’t been able to stave off an increasingly heated competition on the EV market.
Profits dropped by 50%, disappointing investors and leading to a slump in the company’s share prices, which made any good news urgently needed. Tesla delivered: it said it would bring forward the date for the release of new, lower-cost models. These would be produced on its existing platform and rolled out in the second half of 2025, per the BBC.
Reuters cited the company as warning that this change of plans could “result in achieving less cost reduction than previously expected,” however. This suggests the price tag of the new models is unlikely to be as small as the $25,000 promised for the Model 2.
The decision is based on a substantially reduced risk appetite in Tesla’s management, likely affected by the recent financial results and the intensifying competition with Chinese EV makers. Shelving the Model 2 and opting instead for cars to be produced on existing manufacturing lines is the safer move in these “uncertain times”, per the company.
Tesla is also cutting prices, as many other EV makers are doing amid a palpable decline in sales in key markets such as Europe, where the phaseout of subsidies has hit demand for EVs seriously. The cut is of about $2,000 on all models that Tesla currently sells.
By Charles Kennedy for Oilprice.com
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Divisions within the Bank of Canada over the timing of a much-anticipated cut to its key overnight interest rate stem from concerns of some members of the central bank’s governing council that progress on taming inflation could stall in the face of stronger domestic demand — or even pick up again in the event of “new surprises.”
“Some members emphasized that, with the economy performing well, the risk had diminished that restrictive monetary policy would slow the economy more than necessary to return inflation to target,” according to a summary of deliberations for the April 10 rate decision that were published Wednesday. “They felt more reassurance was needed to reduce the risk that the downward progress on core inflation would stall, and to avoid jeopardizing the progress made thus far.”
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Others argued that there were additional risks from keeping monetary policy too tight in light of progress already made to tame inflation, which had come down “significantly” across most goods and services.
Some pointed out that the distribution of inflation rates across components of the consumer price index had approached normal, despite outsized price increases and decreases in certain components.
“Coupled with indicators that the economy was in excess supply and with a base case projection showing the output gap starting to close only next year, they felt there was a risk of keeping monetary policy more restrictive than needed.”
In the end, though, the central bankers agreed to hold the rate at five per cent because inflation remained too high and there were still upside risks to the outlook, albeit “less acute” than in the past couple of years.
Despite the “diversity of views” about when conditions will warrant cutting the interest rate, central bank officials agreed that monetary policy easing would probably be gradual, given risks to the outlook and the slow path for returning inflation to target, according to the summary of deliberations.
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They considered a number of potential risks to the outlook for economic growth and inflation, including housing and immigration, according to summary of deliberations.
The central bankers discussed the risk that housing market activity could accelerate and further boost shelter prices and acknowledged that easing monetary policy could increase the likelihood of this risk materializing. They concluded that their focus on measures such as CPI-trim, which strips out extreme movements in price changes, allowed them to effectively look through mortgage interest costs while capturing other shelter prices such as rent that are more reflective of supply and demand in housing.
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They also agreed to keep a close eye on immigration in the coming quarters due to uncertainty around recent announcements by the federal government.
“The projection incorporated continued strong population growth in the first half of 2024 followed by much softer growth, in line with the federal government’s target for reducing the share of non-permanent residents,” the summary said. “But details of how these plans will be implemented had not been announced. Governing council recognized that there was some uncertainty about future population growth and agreed it would be important to update the population forecast each quarter.”
• Email: bshecter@nationalpost.com
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Shares in US tech giant Meta have sunk in US after-hours trading despite better-than-expected earnings.
The Facebook and Instagram owner said expenses would be higher this year as it spends heavily on artificial intelligence (AI).
Its shares fell more than 15% after it said it expected to spend billions of dollars more than it had previously predicted in 2024.
Meta has been updating its ad-buying products with AI tools to boost earnings growth.
It has also been introducing more AI features on its social media platforms such as chat assistants.
The firm said it now expected to spend between $35bn and $40bn, (£28bn-32bn) in 2024, up from an earlier prediction of $30-$37bn.
Its shares fell despite it beating expectations on its earnings.
First quarter revenue rose 27% to $36.46bn, while analysts had expected earnings of $36.16bn.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said its spending plans were “aggressive”.
She said Meta’s “substantial investment” in AI has helped it get people to spend time on its platforms, so advertisers are willing to spend more money “in a time when digital advertising uncertainty remains rife”.
More than 50 countries are due to have elections this year, she said, “which hugely increases uncertainty” and can spook advertisers.
She added that Meta’s “fortunes are probably also being bolstered by TikTok’s uncertain future in the US”.
Meta’s rival has said it will fight an “unconstitutional” law that could result in TikTok being sold or banned in the US.
President Biden has signed into law a bill which gives the social media platform’s Chinese owner, ByteDance, nine months to sell off the app or it will be blocked in the US.
Ms Lund-Yates said that “looking further ahead, the biggest risk [for Meta] remains regulatory”.
Last year, Meta was fined €1.2bn (£1bn) by Ireland’s data authorities for mishandling people’s data when transferring it between Europe and the US.
And in February of this year, Meta chief executive Mark Zuckerberg faced blistering criticism from US lawmakers and was pushed to apologise to families of victims of child sexual exploitation.
Ms Lund-Yates added that the firm has “more than enough resources to throw at legal challenges, but that doesn’t rule out the risks of ups and downs in market sentiment”.
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