Tesla’s stock (TSLA) witnessed a significant 12% surge today, marking one of its most impressive performances in recent times. This surge occurred despite the company’s financial results for Q1 2024 falling short of expectations in terms of both revenue and earnings.
Despite the earnings miss, several positive factors contributed to Tesla’s stock surge. The automotive gross margins remained largely stable despite increased price costs and the ramp-up of the Cybertruck and Model 3 Highland. Furthermore, Tesla confirmed that its gross margins improved in Q1 after excluding these factors.
Another contributing factor was Tesla’s confirmation that its strategy still involves introducing cheaper models, although potentially not priced at $25,000 as previously anticipated. These models will be built on existing manufacturing lines, providing a positive signal to investors.
Additionally, Tesla’s focus on artificial intelligence (AI) is believed to have played a significant role in its stock surge. The company revealed its impressive AI training compute capacity, which is still expanding. Tesla plans to leverage this capacity to train its Full Self-Driving system using the millions of miles driven with the supervised version of the system. This move is seen as a positive step in Tesla’s pursuit of autonomous driving capabilities.
Tesla’s strategic positioning in the AI space has also contributed to its increased credibility in the self-driving domain. While skepticism remains, Tesla’s recent software updates, such as v12, have demonstrated progress. The company’s approach to AI training, similar to its strategy with battery cells, involves acquiring components from suppliers and developing its own capabilities.
Overall, Tesla’s stock surge is attributed to a combination of factors, including stable automotive gross margins, confirmation of future cheaper models, and the company’s strategic focus on artificial intelligence. These positive developments have outweighed the impact of the Q1 earnings miss, leading to a surge in investor confidence and a substantial increase in Tesla’s stock value.
