The primary theme turbocharging the Magnificent Seven is the inclusion of artificial intelligence (AI). Tesla’s launch of its AI robotaxi is signaling to its Mag Seven peers that the company is ready to compete with the big boys.
The electric automaker operates in a different market segment versus, say, a Microsoft and Amazon. But as part of the vaunted Mag 7 names, questions arose as to how the company can include AI when its aforementioned peers have been building our their AI platforms.
Problems in EV Demand?
The AI robotaxi was their answer, which drew a positive initial response from the market. Now comes the more difficult task of keeping its investors appeased in the long-term horizon. This is especially pertinent given the decline in Tesla vehicle sales during the month of April. The company saw sales fall by 16% that month, potentially signaling problems in EV demand.
It’s certain that EV sales will continue to capture market share in the global electrification push. But Tesla’s 40% occupancy in the EV market may unnerve investors. As Fortune magazine succinctly put it: “When Tesla sneezes, the entire U.S. electric vehicle market catches a cold.”
Nonetheless, the launch of the robotaxi can hopefully add a potential revenue generator when EV sales are lagging. Tesla’s foray into robotaxis has been in the works for some time. So the launch can help offset any negative sales news.
Excitement for Growth Prospects
Furthermore, there’s plenty of growth to be forecasted in the burgeoning robotaxi industry. CEO Elon Musk said the industry will “move the financial needle in a significant way” for Tesla “probably around the middle of next year, second half of next year.”
For Tesla shareholders, it certainly injects excitement for the growth prospects of the electric automaker. With Musk out of the White House and focusing squarely on his business ventures, it’s an added catalyst for bullish stock prices moving forward.
Profit Whether TSLA Is Up or Down
Tesla’s stock is down for the year, but its decline started even before the tariff-fueled April sell-off took place. It has been starting to creep higher again the past few months, but traders should always expect volatility when trading the EV manufacturer.
With a five-year monthly beta of 2.46, Tesla’s price can be prone to swings. This means Tesla’s stock is 2.46 times more volatile compared to the overall market. For risk-averse investors, it can certainly upset the digestive system. For traders, it can signal opportunities.
Consider using single-stock ETFs like the Direxion Daily TSLA Bull 2X Shares (TSLL ), which offers double the exposure to the company’s stock when prices rise. Not-so-positive news like negative earnings reports could spell more gains for the Direxion Daily TSLA Bear 1X Shares (TSLS ). Traders can go long with TSLL and take a hedging position simultaneously with TSLS, allowing for a greater degree of market flexibility. In a market full of uncertainty like now, this is imperative.
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