Tesla stock recently traded around $211, having almost doubled from its December low.
Famed money manager Cathie Wood, chief executive of Ark Investment Management, has been a Tesla (TSLA) – Get Free Report proselytizer for quite some time.
She predicted in 2020 that shares of the electric vehicle titan would reach $7,000 by 2025. Wood has tempered that bullishness a bit, now predicting a price of $1,500 to $1,600 by 2028. But that’s still almost eight times the recent price of $210.90.
And what makes Wood so enthusiastic? “Tesla is one of the most profound AI [artificial intelligence] companies out there,” she told Maria Bartiromo on Fox Business.
That’s why the stock is one of the biggest holdings in several Ark exchange-traded funds, Wood said. “It’s not an auto company, it’s a technology company.”
She’s particularly enthusiastic about Tesla’s autonomous taxi effort. “That’s the biggest opportunity in the next five to 10 years around AI,” Wood said. “Autonomous taxi platforms, and Tesla is in the pole position, will have [profit] margins in the 80% range.”
Wood Breaks Down Tesla’s Strength
One-third of Tesla’s stock surge over the next five years will come from growth in electric vehicle industry and the rest will come from AI, Wood said. “That’s probably the biggest killer app globally.”
Meanwhile, Wood called her flagship Ark Innovation ETF (ARKK) – Get Free Report the “new Nasdaq” last week. She was referring to the Nasdaq Composite index, a benchmark for technology stocks.
“Our portfolio is based on the future, while the Nasdaq and other benchmarks have more traditional names,” she said.
To be sure, the companies at the top of those indices have done well, Wood acknowledged, “but many will be disrupted.” Alphabet’s Google already is seeing a threat to its search business from Microsoft through its use of AI, she said.
As for the recent layoffs announced by technology companies, that’s not a sign of disarray in the industry, Wood said.
Many tech companies had to gear up hiring to handle covid, Wood said. “Maybe they went a little too far. Now they are seeing opportunities with AI and other tools for productivity gains.”