Tesla, Inc. (NASDAQ:TSLA) is actively moving from an EV manufacturer to an artificial intelligence powerhouse, and Wedbush analyst Dan Ives is fully on-board.
Ives pointed to recent aggressive AI investments as the beginning of Tesla's "golden AI chapter” that could push its market cap to $2 trillion in early 2026, with a bull case scenario reaching $3 trillion by the end of the year.
Tesla’s AI Era
Ives labeled Tesla's AI strategy as the company’s “golden goose” and pointed to several new developments:
- Robotaxi Dominance: Tesla plans to add seven new robotaxi cities in the first half of 2026, aiming for deployment in up to half of all U.S. states by year-end. Fleet size is projected to double every month throughout 2026.
- Optimus Integration: Tesla plans to halt Model S and Model X production to convert that space into an Optimus production factory. The goal is to reach an annual production of 1 million Gen 3 robots, with significant volume expected by late 2026.
- FSD Monetization: Full Self-Driving (FSD) is transitioning to a fully subscription-based model in 2026. The active subscription count has already reached 1.1 million, growing 38% year-over-year.
- Custom Silicon: Tesla is accelerating its custom inference chips, with AI5 production planned for 2027 and promising a 50x performance improvement over current hardware.
Financial Commitment to AI Innovation
Tesla is prepared to spend heavily to fuel its AI era. The company anticipates approximately $20 billion in capital expenditures for 2026 to fund six factory buildouts, including refineries, LFP factories and dedicated facilities for the Cybercab and Optimus.
Tesla disclosed in the Q4 report that it will invest $2 billion into Elon Musk's private artificial intelligence firm, xAI, to "enhance Tesla's ability to develop and deploy AI products and services into the physical world at scale."
Despite the massive outlays, Tesla maintains a robust balance sheet with $44.06 billion in cash, providing the liquidity needed to navigate its "golden AI chapter," Ives said.
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