Since the launch of OpenAI‘s ChatGPT, artificial intelligence (AI) has risen to the top of the year’s important trend list. The United States government has already prioritized it, joining forces with the European Union to help experts work to develop AI tools even further. This has already created a tremendous opportunity for investors, sending AI stocks onto an impressive month-long surge that shows no signs of slowing down. But investors shouldn’t be focusing solely on companies building AI systems and tools.
Cathie Wood has identified a stock that she thinks will give investors the exposure to the booming AI market that they need and it isn’t C3.ai (NYSE:AI) or Splunk (NASDAQ:SPLK). Wood sees the biggest opportunity in Tesla (NASDAQ:TSLA). If she’s correct in her bullish thesis on it, TSLA stock will be among the year’s winners.
Let’s take a closer look at the electric vehicle (EV) leader and why Wood sees it as a great AI bet.
TSLA Stock in an AI-Driven World
Why does Wood think TSLA stock is a potential winner of the AI boom? She recently discussed it in an interview with Yahoo Finance, laying out what she sees as the most important aspects of this new market fad. From Wood’s point of view, the greatest opportunity will be in investing in companies with the most/best data.
This is exactly the same logic she employed when she made a bullish case for cancer detection innovator Exact Sciences (NASDAQ:EXAS). As Wood sees it, Exact’s vast data on cancer gives it an edge over competitors. And according to her, Tesla leads all other companies in terms of data on real-world driving, thereby granting TSLA stock the same edge.
However, that isn’t where it stops. Wood also seems to believe that Tesla will be the winner of the autonomous vehicle race, In her words:
“It’s also a winner-take-most opportunity. The company that is able to get an autonomous vehicle from point A to point B the most safely and quickly is going to be the winner. That’s going to be the go-to service.”
Plenty of experts have expressed similar takes regarding the race to perfect driverless cars. Tesla has worked hard to stay ahead of competitors as automakers such as Ford (NYSE:F) and Waymo have amped up autonomous vehicle production. But its full-self driving (FSD) technology has generated plenty of controversies as it has led to accidents on the road. In October 2022, the Department of Justice launched an investigation into claims made by the company regarding its FSD progress.
Additionally, Tesla has refused to use light detection and ranging (lidar) technology in its autonomous driving systems. Some experts, such as Taylor Ogan, founder of Snow Bull Capital have expressed concern that this will hold Tesla back in the driverless race. The leadership team at lidar pioneer Luminar (NASDAQ:LAZR) believes that its technology will be the key to perfecting safe, autonomous technology and so far, it has the results to back it up.
The Road Ahead
Wood’s point regarding Tesla’s data advantage is well taken. But she doesn’t seem to have accounted for the problems regarding its FSD tech. This doesn’t mean that TSLA stock won’t rise in 2023 as AI enthusiasm mounts. But investors should be mindful of the roadblocks that it has encountered so far. It will likely be the “winner-takes-most” opportunity that Wood highlights, but that doesn’t mean the winner will be Tesla.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.