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If I Could Only Buy 1 "Magnificent Seven" Stock in October, This Would Be It | The Motley Fool

By Adam Spatacco

If I Could Only Buy 1 "Magnificent Seven" Stock in October, This Would Be It | The Motley Fool

If Tesla looks a little out of place on this list, that's because it kind of is. High inflation and rising interest rates have been particularly demanding for Tesla's electric vehicle (EV) empire over the last couple of years.

While these macroeconomic forces appear to be trending in a more positive direction, the recent sell-off in Tesla stock following the company's highly anticipated, yet somewhat of a letdown Robotaxi reveal earlier this month suggests that investors may see the company's future as rather ambiguous. With third-quarter earnings slotted for Oct. 23, expectations are undoubtedly sky high.

To put it bluntly, Tesla is not in a magnificent situation right now. But as a long-term investor, I'm less concerned with the "now" and more focused on the road ahead. Below, I'm going to break down why I think Tesla is still a compelling opportunity and why now could be a lucrative opportunity to buy some shares.

Tesla CEO Elon Musk has been touting the company's progress in artificial intelligence (AI) for many years, specifically, as it relates to autonomous driving and humanoid robotics. Musk has an uncanny ability to tell compelling stories, and as such, he's done a good job painting a picture of what Tesla's future could look like.

I used the word "could" deliberately in the above sentence. There is no guarantee that Tesla will master self-driving vehicles or robotics, and unfortunately for investors, reality started to sink in last week following the Robotaxi event.

To summarize, Tesla's Robotaxi demo featured limited driving. And while the company's humanoid robot, Optimus, demonstrated some interesting features, such as serving drinks to spectators and busting out some dance moves, these aren't exactly real-world applications.

All in all, the Robotaxi event failed to live up to Musk's hype, and investors have been punishing Tesla stock as a result.

One thing that I admire about Musk is his straightforward demeanor. He says what's on his mind and moves on. While such an approach to management can be off-putting for some, I found his remarks about being a Tesla shareholder both sobering and accurate. During Tesla's Q2 earnings call, Musk told investors to sell their stock if they don't believe in the company's AI vision.

I predict he will double down on this stance next week, during the Q3 earnings call. My interpretation is that Musk is subtly telling investors that autonomous driving and humanoid robotics are complex, sophisticated technologies that can't be developed overnight.

The more important idea is that Tesla is aggressively pursuing two pockets of the AI realm estimated to be worth trillions of dollars in the coming decades. Musk himself called Optimus a $200 trillion opportunity.

In a way, I think expectations for the Robotaxi event were unrealistic. But to be fair, part of that blame has to go to Musk, considering he's been talking about how great Tesla's progress has been for a while now.

I think the recent sell-off in Tesla stock is driven more by emotion than sound logic. While Tesla may not be as far along in autonomous driving or robotics as some may want, the company is still a leader in both areas and isn't slowing down its progress anytime soon.

I'm anticipating the earnings call next week to be a spectacle featuring brutal, honest remarks from Musk as he spars with Wall Street analysts who will likely pepper him with questions about when self-driving cars and Optimus will be fully commercialized and operating at scale.

Unless Tesla surprises the world and unveils a new product or something groundbreaking during the call, I wouldn't be surprised to see the stock fall even further. That said, a big reveal is highly unlikely as Musk appears to be playing the long game with AI and isn't in a rush to release products that could backfire if they aren't perfect.

While Tesla's Magnificent Seven peers may look better positioned right now, I'll take someone else's dissatisfaction as an opportunity to build my position. As I alluded to in the introduction, Tesla shareholders should worry less about today and instead be thinking about where Tesla can be many years from now.

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