Prediction: This Artificial Intelligence (AI) Stock Will Drop Out of the $1 Trillion Club in 2025

Tesla Stock Performance and Market Capitalization - Tesla stock rose by 70% during 2024, reaching a market capitalization of over $1 trillion [1] - The stock gained momentum after Donald Trump won the presidential election in November 2024 [1] Political Influence and Regulatory Expectations - Tesla CEO Elon Musk supported the Trump campaign, leading to speculation of lighter regulations under the new administration [2] - A favorable regulatory environment could accelerate the approval of Tesla's full self-driving (FSD) technology [2][9] Electric Vehicle (EV) Sales and Challenges - Tesla's EV sales declined by 1.1% in 2024, marking the first annual decline since the launch of the Model S in 2011 [3][4] - The company delivered 495,570 EVs in Q4 2024, below Wall Street's consensus forecast of 504,770 [4] - EV sales still account for 79% of Tesla's revenue, making it a critical part of the business [5] Future Growth and Strategic Shifts - Elon Musk projected EV delivery growth of 20% to 30% in 2025 but canceled plans for a new low-cost model [6] - Conflicting reports suggest Tesla may launch an affordable EV called the Model Q and a cheaper variant of the Model Y [6] - Tesla faces competition from low-cost manufacturers like BYD, which sells EVs for less than $10,000 in China [7] Focus on Full Self-Driving (FSD) Technology - Tesla is shifting focus to autonomous EVs, such as the Cybercab robotaxi, set for mass production in 2026 [8][9] - The Cybercab will rely entirely on Tesla's FSD software and will not have pedals or a steering wheel [9] - Tesla plans to build its own ride-hailing network, allowing the Cybercab to generate revenue 24/7 [10] Revenue Potential from FSD and Cybercab - Ark Investment Management estimates Tesla could generate $1.2 trillion in annual revenue by 2029, with FSD and the Cybercab accounting for 63% [11][12] - Wall Street analyst Dan Ives predicts FSD will become a $1 trillion opportunity over time [12] Valuation and Investor Concerns - Tesla's stock is trading at a P/E ratio of 104, significantly higher than most other tech stocks with similar valuations [13][14] - The company's EV deliveries declined in 2024, which typically warrants a lower P/E ratio [14] - Investors are paying a premium for Tesla stock in anticipation of future FSD revenue, which may not materialize until 2026 [15] - Tesla's market capitalization is $1.2 trillion, and a 16% decline would drop it out of the trillion-dollar club [16]