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Tesla just reported earnings. The stock is down roughly 3.8% after hours. Today, what we're going to do is cover bullish bearish thoughts. More importantly, if even if you're not in Tesla shareholder, we're also going to discuss some things that Elon mentioned about Nvidia and what AI stock investors should know from this earnings call.
Let's take a closer look in today's episode. I want to thank the Mly Fool for sponsoring this video and check out fool.com/hose for the 10 best stocks to buy now. With that link, you get a promotional offer for their subscription service. Now, let's continue with today's episode. All right, so first let's just start off with quick price action movement.
Um, the stock right now is down roughly 3.8% at $422. Now, this is a stock that on a year-to-ate basis will probably be closer to a 10% growth year to date, but from its overall lows that it saw in March of roughly $222, the stock is still up nearly nearly 100%, a little bit over 90%. So, first I just want to start off with some charts here at fiscal.ai and check out fis.ai/ose for 15% off.
But I just want to share certain pictures that show where the market is going right now. So, first the automotive market did see a nice growth sequentially and year-over-year roughly 20.3 billion. This is almost a record revenue for them. One of their records in automotive sale was roughly 20.4 and 20.6 here in December of 2023.
And the question I have here and I think many investors is is this the invocation of great quarters coming from here on out or was this just a one-time thing as EV credits were ending in the United States and it just pulled a lot of those orders to happen this quarter opposed to happening maybe later on.
So this is something that I guess investors are a little bit worried about. Another chart that I want to showcase is just free cash flow in the last 12 months. $6.8 billion. We are getting up there in numbers and again what not the best uh in the past few years but it is a massive improvement from where this company was just about a year or two ago.
So huge improvement here on free cash flow a nice growth sequentially on the last 12 months and a nice growth year over year. The final chart is obviously with EV credits, the cost is going to impact a lot on Tesla units, especially if they either decide to reduce prices or if customers slow down certain orders.
But regardless, this would be a bearish case where the gross profit margins right now continues to trend down on a last 12-month basis. So, let me know what you guys think with these three charts. Is there anything that gets you excited? Is there anything that you're worried about? Now, the next thing I want to look at is this pretty cool presentation that I have set up for you.
We're going to look at major risk opportunities and key AI insight from the latest report. All right, so let's jump into risks. The first risk is tariffs and trade policy uncertainty. So Tesla faces significant financial pressure from tariffs which directly impacted profitability in quarter 3. The total impacts for quarter three for both businesses, their automotive and their overall uh energy business was roughly $400 million generously evenly between them.
Management also acknowledges this is an ongoing challenge and they are seeing headwinds in this business given the increase in competitions and tariffs. They also mentioned it is difficult to measure the impacts of shifting global trade and fiscal policies on their cost structure and demand. So so much uncertainty, so much cloudiness coming in from both trade policies and tariffs and physical um fiscal policies, right?
Kind of like that EV. How is this going to impact the buying of electric vehicles or the buying of some of their energy products in the next few quarters? And I think that's something that investors are a little bit scared of now. The second kind of risk that they talk about was optimist scaling in the supply chain.
Right? While optimist is a massive opportunity, the path to profits in this market faces substantial execution risk. Bringing optimist to market is an incredible difficult task. To be clear, it's not some walk in the park. And this is maybe kind of bringing certainty. Not saying all Tesla shareholders are are uber bullish, but certain Tesla shareholders to say, "Look, well, we can be successful in this.
It's not going to be a easy road. It's going to take time." And the main thing is if you're trying to make a million Optimus robots per year, the manufacturing challenge is immense considering that the supply chain doesn't exist, unlike with cars where you can get an existing supply chain already. So that's going to be the hardest thing about ramping up the optimist market.
I guess one bullish thing about this is and bullish and bearish is a lot of companies are working in the robotic space. So the supply chain might be improving a little bit quicker than maybe certain industries and maybe certain people expect, right? Because all these companies are working to make sure that there is some form of supply chain presence for the in the future of the robotic space.
Now, before we go any further, we did hit 80,000 subscribers this today. So, thank you. Thank you so much. If you haven't, make sure to hit the subscribe button. We're trying to hit 85,000 by the end of the year. I'm hoping we can do it. Also, if you want a free AI chip newsletter, make sure to check out what the chiphappen.com.
I also have special offers at full.com/jose fiscal.ai/jose for 15% off on charts that I use on a daily basis. I also use Mumu, amazing intro offer. The link is in the pin comments and also Trendpider for some form of charting. Now, let's talk about opportunities. And for me, opportunities are pretty exciting, not just if you're a Tesla shareholder, but just as the overall ecosystem of AI.
So first they talk about their AI5 chip and they this is their in-house chips and they believe it represents a transformational cost and performance advantage that will directly impact margins. By some metrics the AI5 chip will be 40 times better not 40% time 40% better 40 times better than their AI4 chip.
The economic impact is substantial. I think the AI5 will be the best performance per dollar for maybe by a factor of 10. So this translates to lower cost and the new AI revenue stream where Tesla will manufacture with Samsung and TSMC to ensure an over supply. And the reason they want an over supply is they have so many different opportunities.
They can use it on their robotics uh on Optimus. They can use it on their Tesla fleets and anything that's uh that's excessive they can use in their data centers. And we'll talk a little bit about Nvidia in the future um future in this episode. But this is not bearish to Nvidia. We're going to see they're kind of co-working with their other platforms.
Now another growth opportunity is the energy storage profitability. Um they achieve record storage deployment gross profits and margin. Gross profit reached a record $1.1 billion. The demand for Mega and Power Wall continues to be really strong into next year and seeing remarkable growth in demand for AI and data center applications.
So that's a huge opportunity for you for them, right? the energy business can definitely benefit dramatically from that space where right now we're trying to find ways to control the grid and obviously kind of these DC batteries are very crucial to make sure you have that constant voltage all the time.
Uh we are kind of moving into that 800vt DC uh data center rack. So this is an opportunity where Tesla can definitely shine in the data center space. Now within the energy storage the numbers confirm a growth story positioning energy as a major profit driver alongside automotive a storage deployment was up 81% year-over-year deployed roughly 12.5 gawatt in quarter 3 and they expect up to 50 gawatt annual capacity from the new mega factory Houston starting in 2026.
So this is definitely a nice growth opportunity for them. Now I want to kind of circle back. I mentioned that there's something that Tesla said about Nvidia and one thing Nvidia investors should know Tesla is designing AI5 for specific use cases not compete broadly with Nvidia and Elon kind of gave some hats off and and perks and and great discussion and reviews about Nvidia.
He's mentioned Nvidia has done an amazing job, but in our case, we're going for radical simplicity. Nvidia keeps improving, but they got to satisfy a large range of requirements. Tesla only has to satisfy requirements from one customers. That's Tesla, right? So, the great things about AI chips is for example a cloud server provider, you're doing various different workloads.
Tesla only is really doing a selected a handful amount of workloads and they it makes it easier for them to design these chips as that's only thing that they're focusing on. But regardless they're still going to need them for the training cases. This is more for the AI inference side which kind of goes into the vehicles into the robotics.
So there is where they can offset with Nvidia, but in a lot of the other aspects of the actual training and stuff like that, um Nvidia is still going to be a part of that. So Tesla's AI training capacity reached 81,000 H100 equivalents, showing continued demand for Nvidia hardware. So pretty excited.
I wouldn't take this as a bearish case for Nvidia. Tesla actually and Elon actually saying really nice things about Nvidia in my opinion should just show how strong Nvidia is as a company. Now one thing that AI investors should know. So first I talked about what Nvidia investors should know. I want to share something that AI investors should know.
Tesla has achieved what they mentioned the highest intelligence density of any AI out there in the car by designing the entire stack end to end. They have in detailed understanding of the entire software and hardware stack. We know what the chip needs to do and what the chip doesn't need to do. This enable radically simplicification simplification for the A15 where they deleted the legacy GPU.
They also deleted image signal processor. The result is that the A5 fits in half rectangle dramatically reducing manufacturing costs. I think that's impressive and as an AI investor, you can definitely see the innovations that this company is doing. So, I think that's all I have for Tesla shareholders.
Uh, and in my opinion, the company is definitely one that is shouldn't be trading as a car company, but is the valuation really worth where we're at right now. I think there's a lot of growth opportunities. And for me personally, while I am a Tesla shareholder, I'm not out here buying the small dip.
So maybe I I should start off with there. I'm not buying the small dip. And if I was buying a Mac 7, I don't think Tesla would make even the top three of my list right now. I I I definitely would put other Mac 7s on the top three over Tesla. Now, I'm not saying I'm bearish in Tesla. I just have no intentions of adding anytime soon.
So, I hope you guys enjoyed today's episode. Take care. Have a good day. And see you all next
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