Wedbush analyst Dan Ives believes Tesla is undervalued in the AI market due to its autonomous driving and robotics potential. Despite losing market share to BYD, Tesla launched an autonomous ride-sharing service. Tesla’s stock may seem expensive now, but could be a bargain later if it capitalizes on AI opportunities.

Tesla’s financial performance in the second quarter was disappointing, with declining deliveries and revenue. Sales in China, Europe, and the U.S. dropped, affecting market share. However, Tesla sees huge potential in autonomous driving and robotics, aiming to be a leader in this sector.

Tesla’s future success hinges on AI, with plans for autonomous ride-sharing and a humanoid robot. The company’s approach differs from competitors like Waymo, focusing on computer vision instead of detailed mapping. Tesla aims to disrupt the mobility and labor markets, potentially reaching a $30 trillion market value.

While Tesla’s stock is expensive, some investors see potential in its shift to AI. Those who believe in Tesla’s ability to innovate may find the stock worth owning, despite its high valuation. Risk-tolerant investors could consider buying a small position in Tesla now.

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Citigroup is an advertising partner of Motley Fool Money. Trevor Jennewine holds positions in Nvidia, Palantir Technologies, and Tesla. The Motley Fool has positions in and recommends Alphabet, Nvidia, Palantir Technologies, and Tesla, and recommends BYD Company.

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