Tesla Inc.’s (TSLA) recent stock downturn is more likely a result of a broader sell-off in Artificial Intelligence (AI) stocks than a potential share sale by Elon Musk, according to Gary Black, managing partner of The Future Fund.
Black refutes the notion that Musk is offloading Tesla shares to meet financial obligations for X, his social media platform, before the third-quarter trading window closes. Instead, he pinpoints Broadcom Inc.’s (AVGO) guidance miss as the probable trigger for the AI stock selloff. Tesla, known for its AI advancements like full self-driving (FSD), has been swept up in this downturn.
Black’s analysis highlights the correlation between Tesla’s stock performance and other AI heavyweights like NVIDIA Corporation (NVDA), Advanced Micro Devices, Inc. (AMD), and Marvell Technology Group Ltd. (MRVL), all of which have experienced significant declines.
It’s noteworthy that despite the industry-wide downturn, Tesla has expanded its ancillary businesses. The EV giant has also gained favor by avoiding missteps like those made by General Motors and Volkswagen. However, the AI sector, including Tesla, has been significantly impacted by this broader sell-off.
This sell-off is exemplified by Nvidia’s dramatic $279 billion decline in market value following its quarterly financial results announcement. Despite doubled sales, the results fell short of investor expectations, leading to a 2.1% drop in the S&P 500—its largest single-day decline since early August.
While the AI sector faces challenges, it’s important to remember that September is known for heightened volatility and market corrections, making this turbulence not unusual for U.S. stocks.
Tesla shares closed Friday’s trading session down by 8.45% at $210.73, but climbed slightly in after-hours trading, reaching $211.50.
