Rivian Stock Is Outrageously Cheap -- Here's Why There Could Be 5,000% in Upside Potential

Rivian Automotive's (NASDAQ: RIVN) marketplace headdress presently hovers astir $21 billion. Meanwhile, Tesla (NASDAQ: TSLA), the biggest EV banal connected the planet, has a marketplace headdress of astir $1.2 trillion. If Rivian could attain Tesla's valuation, determination would beryllium much than 5,000% successful imaginable upside.

Of course, Rivian won't adjacent that valuation spread overnight. After all, it took Tesla much than a decennary to scope a marketplace headdress of $1 trillion. But determination are 2 maturation catalysts forming close present that powerfully suggest Rivian could yet go the adjacent Tesla.

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For decades, automotive stocks person been valued based connected income maturation and profitability. The extremity was to summation income and profits, hoping the marketplace volition reward those efforts. There's a spot of disconnect occurring now, however, and Tesla's banal terms is the cleanable illustration of that disconnect. For astir 3 consecutive years, Tesla's car income person declined. And yet the company's marketplace headdress is adjacent all-time highs, with a sky-high valuation erstwhile it comes to metrics similar its price-to-sales ratio.

Why does Tesla's banal terms proceed to emergence contempt falling car sales? There are galore reasons. CEO Elon Musk ever seems susceptible of getting investors to absorption connected aboriginal imaginable alternatively than existent struggles. But he's close astir 1 thing: Trailing car income won't beryllium indicative of whether an car institution volition win agelong term. That's due to the fact that there's different exertion adjacent much important to put successful close present alternatively than effort to enactment up volumes. That technology, of course, is artificial intelligence.

Put simply, AI is accelerating self-driving exertion faster than ever before. AI was the missing link, it seems, successful taking successful a monolithic magnitude of real-time information and processing that information into actionable insights.

Tesla's monolithic investments successful AI arguably marque it the starring automaker globally erstwhile it comes to the quality to scope afloat autonomy. And if afloat autonomy is reached, request for Tesla's vehicles volition apt skyrocket. The company's robotaxi efforts, meanwhile, would spot a akin sizable spike successful success. AI and autonomy, therefore, are much important agelong word than trailing car sales.

Rivian can't put arsenic heavy arsenic Tesla, but it's intelligibly pursuing the company's footsteps erstwhile it comes to ramping AI and autonomy investments. Rivian's archetypal AI Day successful December impressed analysts. Investment into AI and autonomy volition beryllium truthful high, successful fact, that absorption precocious shelved its 2027 profitability targets.