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Tesla is in 'incredibly enviable' position for real-world AI

Tesla (TSLA) shareholders voted in favor of CEO Elon Musk's pay package at Thursday's annual shareholder meeting. Canaccord Genuity Managing Director George Gianarikas joins Catalysts to discuss the results of the shareholder vote, takeaways from the event, and the EV company's outlook.

"We were very encouraged that shareholders approved the previously approved pay package. Obviously, Elon Musk is critical to the success of Tesla in the past and in the future... We're very bullish on the long-term prospects of full self-driving (FSD) and we're bullish on robotics," Gianarikas says.

At Thursday's meeting, Musk discussed leveraging the inference compute on some of the full self-driving vehicles, which Gianarikas believes could in the long-term "create something that looks like Amazon's (AMZN) AWS that he can then sell and create a revenue stream around. That's probably going to impact the PNL 2030 and beyond."

As Tesla continues to innovate with AI, Gianarikas believes the company is "in an incredibly enviable position relative to other companies for real-world AI. And what real-world AI means for us in the near term is full self-driving, maybe long-term moving robots."


For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Melanie Riehl

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Video transcript

All right, let's talk about Tesla because shares here moving not too far from the flat line now, they're actually off just about 2%.

So a reversal here from earlier action after shareholders approved Elon Musk's pay package yesterday afternoon at the meeting, Musk also predicted that Tesla's optimism of robots could eventually lift the company's market cap maybe all the way to $25 trillion for more.

I want to bring in George J.

He is K for managing director George.

It's great to have you.

So first, just your reaction to not only the approval but really more so those lofty expectations and goals that we saw laid out from Musk last night.


Uh Good morning.

Thanks for having me.

So first on the shareholder meeting, we were very encouraged that shareholders approved the previously approved pay package.

You know, obviously, Elon Musk is critical to the success of Tesla in the past and in the future, uh that he did make several comments that you alluded to regarding the future of robotics, the future of A I through full self driving.

And we're very bullish on the long term prospects of of full self driving and we're bullish on robotics.

It's just not something that at least from a robotics perspective, we see impacting our estimates anytime soon.

Now as it relates to full self driving, we're, we're very, very bullish on the medium to long term prospects and what we need to hear more about, you know, in the near term.

And on the conference call is what take rates are if you recall, Tesla recently reduced the price of its full self driving software.

Uh If you buy the uh the annual subscription, it's come down to $99 a month.

And we really need to hear how consumers are reacting to that because that is really gonna drive our earnings estimates over the next several years.

Talk to me, George about what you'll be looking at.

Toss out what you just mentioned.

I was really interested in your note that you commented on the potential for a Tesla to start looking like an Aws when it comes to full self driving.

If you saw more R and D into something like chips, for example, would that be an indication to you that that is an area of more growth potential for the firm?

Yeah, so Elon Musk talked about leveraging the inference compute on some of the full self driving ready vehicles long term to create something that looks like AWS that he can then sell and create a revenue stream around that's probably gonna impact the P and L you know, 2030 beyond is our guess.

Uh But in the very near term, like I said, leveraging the A I that he's created within Tesla, the real world A I around full self driving really will drive the P and L to the extent people adopt it.

Do people want to buy the service that enables their vehicles to drive themselves that's super critical.

And we think it's going to be a really important driver over the medium to long term.

But in the near term are people acting to the price cuts that they got and that one month of free service that he enacted a couple of months ago, that's very important to the near term of the firm.

And, and with regard to near term sales now, with something really interesting that he said towards the end of the conversation was two hours long, uh was that they're still, you know, it's tough sledding out there for evs and that they still expect year over year growth.

What's interesting about Tesla stock at this moment?

It's clearly been an underperformer relative to the other, other mag seven over the last call it 12 to 18 months.

And what's driven that is earnings revisions, right?

Ultimately, what drives stocks are earnings revisions and those earnings missions have come in place because EVC have been sort of weak across the world, including for Tesla and their margins have been dramatically impacted.

Now, what could happen from here is that those earnings revisions may at least stop going down.

It may start inflecting upward.

So even though it's tough for EVs, it continues to be tough for evs if they can grow year over year, which and we have 3% year over year growth in units, that's probably better than most people think.

And that earnings inflection will be super important to the near to medium term performance of the stock.


I'm curious how do you view Tesla, where are they positioned in this A I play story?

Because we heard from Musk last night, he by far thinks that Tesla is leading this race.

Do you agree?

Look, they are in an incredibly enviable position relative to other companies for Real World A I and what Real World A I means for us in the near term is full self driving, maybe long term moving robots around.

Uh The other companies that we're very excited about excited about in real world A I are companies like Mo I that are enabling other vehicles to drive themselves.

And a company called Aurora ticker Central A ur that's enabling class eight vehicles to drive themselves, hopefully starting uh at the end of this year.

So they're clearly in a leadership position.

Uh There are other companies that are vying for that leadership position, including mobilize and passenger and Aurora and, and trucking.

And uh we think we're, we're incredibly bullish like I said about the, the medium to long term of, of full self driving for Tesla.

We just really need to hear about those take rates and how consumers have reacted to that price cut.

How much does optimist play into the idea of Tesla as an A I play moving forward?

And obviously Musk seen that they could earn a trillion a year from bots.

You mentioned that that is probably a little bit further off.

But do you think that that is a reality?

Yeah, I mean, look, uh he said yesterday that for every human on earth we're likely to have two robots per person, right?

So that's, you know, in the tens of billions.

Uh I admire him quite a bit, you know, he's done, he's accomplished many, many things.

Uh and, and in, into his own credit, he said that being optimistic, irrationally optimistic has led to the construction of a massive factory in Texas and to this, you know, behemoth that we call Tesla and spacex.

I, we don't have optimism in our numbers anytime soon.

We'll see.

I mean, they said on yesterday's uh at yesterday's event that they'll have 1000 humanoid robots next year.

Plus working at the Tesla factory.

Clearly amazing and not so impactful on the PNL.

Uh It, it's something that is very important for the story.

We'd call it, you know, 5 to 10 years out.

We're not so sure that it impacts the PNL anytime soon.

All right, George.

Thank you.

So much for joining us.

We really appreciate it.

That was George Gian.

I'm so sorry, George Gian Arius.

Can a court genuity managing director?

Thank you so much George for being here with us.

Thank you.