Tesla's Optimus and AI Ambitions: Can Musk's Vision Deliver?

Tesla TSLA is pushing ahead with Optimus—its humanoid robot—and the AI (artificial intelligence) stack behind it. Well, the progress hasn’t been remarkable yet, but it is moving forward.

Tesla CEO Elon Musk said in early 2025 that thousands of Optimus robots should be doing useful work in Tesla factories by year-end. Some already handle basic material movement on factory floors. The robot has been shown walking, picking up objects, folding laundry, and even dancing. But Tesla is behind schedule on its earlier goal to build at least 5,000 robots in 2025.

Tesla is on Optimus Version 2 today. Musk says Optimus 3 lands as a prototype by the end of this year, with production starting early next year. Musk calls the design “exquisite.” If plans hold, Optimus 3 could scale to nearly 100,000 units per month in five years.

Tesla’s AI efforts are key to making Optimus work. Management has called autonomy and AI the company’s biggest edge. That might be true, but for now, it’s still early days.

Earlier, Tesla hyped its Dojo supercomputer to train AI faster. But that project is now closed. Instead, it’s moving to custom AI chips— AI5 (built by TSMC) and AI6 (built by Samsung). Also, a new AI factory is planned, targeted to be in production by the end of next year. The aim is simpler deployment, faster training and lower cost.

Tesla also points to its Full Self-Driving (FSD) system as proof of its AI advantage. With billions of miles of real-world driving data, the company continues to reduce human interventions and claims safety gains over human drivers. Musk argues the same AI principles that train vehicles will allow Optimus to adapt to complex, real-world environments.

Tesla is positioning itself not just as an automaker but as a real-world AI and robotics company. Optimus shows promise but remains in its infancy. Production targets are slipping, and real-world performance trails competitors. At the same time, Tesla’s pivot to new AI chips, its planned AI factory and steady FSD progress show the company is laying important groundwork. For now, 2025 looks like a year of small steps, not breakthroughs.

TSLA’s Rivals in AI Robotics

NVIDIA NVDA has emerged as a powerhouse in AI, withits robotics division gaining rapid momentum. Its Isaac GR00T N1 foundation model is the world’s first open, customizable platform for humanoid robot reasoning. Combined with the upcoming Jetson Thor chip, offering 2,000 teraflops designed specifically for humanoid robots, NVIDIA is building the infrastructure that could power thousands of machines.

Advanced Micro Devices AMD is also pushing into robotics with its Kria System-on-Modules and the KR260 Robotics Starter Kit for industrial robots. Its partnership with BlackBerry QNX gives AMD an edge in enabling real-time robotics with reduced latency. From surgical robots to factory floors, Advanced Micro Devices is planting its flag in the space.

While Tesla wants to build humanoids directly, NVIDIA and AMD want to supply the brains and computing power behind them.

The Zacks Rundown on TSLA Stock

Shares of Tesla have lost around 20% year to date compared with the industry’s decline of 16%.

From a valuation standpoint, TSLA trades at a forward price-to-sales ratio of 10.12, above the industry and its own five-year average. It carries a Value Score of D.

The Zacks Consensus Estimate for TSLA’s earnings has been southbound over the past 60 days.

Tesla stock currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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