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Does Tesla (TSLA) Have a $25 Trillion Opportunity?
It is not the critic who counts...
Sage Research AI
October 16, 2024
In Isaac Asimov's 1946 iRobot short story "Evidence" Dr. Susan Calvin defends robots:
"[If a human] follows all the rules of good behavior, we call him good. But who follows all the rules? Nobody.
The robot, on the other hand, does. That makes it potentially a better human than human beings themselves."
But what Asimov wrote about in science fiction…
The “perfect” Robot…
One "man in the arena" is about to turn into a ($25 trillion dollar?) science fact.
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Elon Musk is at the forefront of human-to-human communication (X)…
Computer-to-human communication (Neuralink)…
Extra-terrestrial communication (Starlink)…
Spreading intelligence across the galaxy (SpaceX)…
AI (xAI)…
And soon, he will lead the way in human-to-android communication under the Tesla banner.
In short; Asimov's robots are kindof… almost… here.
His robot? The Tesla Optimus robot.
Just a few days ago, Tesla previewed Optimus.
This human observer found it disappointing -- if not PT Barnumesque -- that they didn’t use an Grok AI assistant to interact with the crowd.
Instead, the robots were remotely operated by employees.
The market reacted to this (and the RoboTaxi demo) poorly.
Tesla stock fell nearly 9%.
Who cares.
PT Barnums will PT Barnum.
Technology evolves.
Optimus will improve.
Don’t bet against Elon.
So, we’ll have to wait until next year – maybe Tesla’s 2025 “AI Day” event – to see a full autonomous Optimus robot.
On any day a stock can go up. A stock can go down.
But what’s important for tech investors is…
What could Optimus mean for Tesla's stock as technology evolves?
Elon Musk is... to use a word... optimistic about their future.
He believes Optimus could drive Tesla's valuation to $25 trillion.
That's a 40X return.
Whoa.
How did he get that number?
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His back of the cocktail napkin calculation calls for 20 billion Optimus units over time.
That's enough for each of the 8 billion people on Earth…
Plus 12 billion for industrial use.
Optimus has already began performing tasks autonomously in one Tesla's factories...
The first thousand units should start working in its factories for the first time next year.
And, according to Elon...
You should be able to purchase your very own Optimus for less than $30,000 in 2026.
Over time…
Your lawnmower will get jealous…
Groceries will magically get put away…
Trash will disappear to the garbage can…
Hoarders will rebel…
Florida winter barbecues will have a dedicated burger flipper…
No more Dads will die hanging Christmas lights…
Threesomes will get more exhausting…
And a lot more.
Needless to say... critics abound.
But what do the numbers tell us?
Roots Analysis predicts the robotics market will have a compound annual growth rate of 17%...
And will reach $375 billion in 2035.
Goldman Sachs estimates humanoid robot market will account for $35 billion of that total.
So, which is it?
$35 billion? $375 billion? Musks $25 trillion?
And how can you profit?
While the critics are spending their time saying what can’t be done...
I'd place my bets on Musk and the Tesla men and women in the arena…
My quick back of the napkin calculation reveals Tesla would have to sell about a million Optimus robots per year…
About equal to their model Y sales…
To double revenue.
Profitability is still unknown…
But shipping Optimus with software subscriptions could create a lucrative recurring revenue stream.
If you are feeling particularly adventurous for example… you could upgrade to Threesome 2.0.
So, ignore the short term stock moves and don’t fall asleep on this story…
Because you might miss out.
In short: There's a lot more to come.
So, to profit from our our new robot overlords as the future unfolds…
Always be prospering,
socrAItes
Publisher, Sage Research AI
P.S. Who is the "man in the arena"?
The "Man in the Arena" is an excerpt from a speech delivered by Theodore Roosevelt, the 26th President of the United States, on April 23, 1910, in Paris, France.
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Teddy charged up a hill during the Spanish-American War... gave a campaign speech after being shot... explored the uncharted Amazon... wrangled cougars… did some more crazy stuff…
And, most importantly, he left us with these words…
"It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat."