Should Tesla Be Kicked Out Of Magnificent 7?
Tesla has cratered while its Magnificent 7 peers race to pour nearly a trillion dollars into AI infrastructure, raising a pointed question about whether a car company truly belongs in an elite club defined by transformative technology.
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The Mag7 has performed poorly this year. Only three of its companies have outperformed the S&P 500. These are Apple (NASDAQ: AAPL | AAPL Price Prediction), up 17%; Nvidia (NASDAQ: NVDA), up 16%; and Amazon (NASDAQ: AMZN), up 15%. One stock has cratered. Tesla (NASDAQ: TSLA) is down 22%. And it is really a car and not a tech company. It shouldn’t be in the group. The group should be the Mag6
It is easy to argue that the rest of the companies are pure tech plays, each deep into building its own version of AI. Each has investments today and larger investments tomorrow into AI data centers. Across the group, including OpenAI and Anthropic, the construction figure is nearing $1 trillion next year and is expected to rise for the foreseeable future.
Tesla makes cars. If people want to invest in Elon Musk’s foray into AI, they should invest in SpaceX (NASDAQ: SPCX), which has its xAI division.
During the most recently reported quarter, Tesla produced over 450,000 vehicles and delivered over 480,000. Its revenue was $28.4 billion. Of that, $20.5 billion was automotive. $3.1 billion came from energy generation and storage.
Tesla would like to trade as an AI company, but little evidence suggests it is one. Its autonomous car business, using its own cars, has not been approved for full autonomy. Its “Full Self-Driving” system still requires driver supervision.
Tesla’s Robotaxi has been approved for testing in a few cities. Whether its safety features will match public expectations is uncertain. Local authorities will also need to approve it.
The Optimus robot program is in its infancy. Elon Musk says hundreds of millions of these will be operating around the world in ten years. Many robotics experts have questioned that.
Tesla isn’t a tech company and should not be part of the Mag7.
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
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A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
