Lack of AI Association Pushing Tesla Stock Down Further

The not-so-secret ingredient that’s been fueling gains for big tech since its fourth quarter has definitely been artificial intelligence (AI). The lack of AI tailwinds for Tesla could be pushing the company’s stock down further.

The stock has decreased by more than 20% for the year, while its “Magnificent Seven” peers have managed to shake off a slow start to 2024.

“That’s part of a growing debate on Wall Street, where shares of Elon Musk’s electric-vehicle maker are tanking as the rest of the market rallies — and the company is warning that things may not get better for a while,” a Yahoo Finance report said, noting that Magnificent Seven stocks have been leading the gains for the S&P 500, while “traders are now wondering if Tesla’s name belongs next to those other powerhouses.”

As mentioned, one of the reasons could be a direct connection to AI, or in the case of Tesla, a lack thereof. AI’s bright growth prospects are helping companies like Amazon and Microsoft, given their investments in AI technology.

“Although Elon Musk would probably disagree, investors don’t see Tesla as an AI play like most of the other Magnificent Seven stocks,” said Matthew Maley, chief market strategist at Miller Tabak + Co. “We have a much different backdrop for Tesla and the others in the Mag Seven — the demand trend for Tesla products is fading, while it’s exploding higher for those companies that are more associated with AI.”