Tesla: My Top 5 Takeaways From AI Day 2.0 (NASDAQ:TSLA)

What is the Purpose of this Article?

I wanted to share my five biggest takeaways from watching the second live Tesla (NASDAQ:TSLA) AI Day presentation. Some of these observations may be obvious to some investors, maybe all investors, but, for myself, many of these were aha moments. These were moments that strengthened my conviction in:

• The company culture and talent of Tesla
• Future revenue and margin optionality
• Their focus on manufacturing and lowering costs at scale
• Tesla’s marketing genius
• The company’s lead in AI and Robotics

Company Culture and Talent Dominance

The number one thing that stood out to me on A.I. Day was the extreme confidence and openness of the company with its presentation. I cannot remember any other leading technology company divulging the inner workings of their technology, goals, and competitive advantages to the public. I really had to stop and think about how confident and focused Musk and his engineering team have to be to operate like this. I love it. First, Tesla makes all of their patents open source for the better good of progressing the adoption of creating EVs, and now they are sharing how they are approaching Full-Self Driving (FSD) capabilities and how they created their humanoid Optimus robot. It is almost like they are saying to competitors, “I dare you to do what we are doing and copy our work, to try to do what we are accomplishing. We don’t believe you have the talent and resources to do it, or catch up fast enough.” It demonstrates such a swagger by Tesla but also a commitment to continuing to innovate unlike any competition. I believe this is how all companies should be run with transparency, honesty, and mission-driven, but only the best of the best can afford to do this. These are the companies you want to invest in.

I was also impressed how Musk allowed numerous engineers to have the opportunity to share what parts of Optimus, FSD, etc. they helped create and also how Tesla created the technology. Viewers got to see how talented the engineering team is at Tesla and the problems they are trying to tackle are industry changing. I am sure some analysts maybe most, won’t fully digest the magnitude of engineering excellence that was displayed at AI Day. The Optimus Robot Bumble C was made able to walk on stage without a tether within 6-8 months. The robot wasn’t just walking around in the office but also picking up a watering jug and watering plants. Imagine what Tesla is going to be able to do with Optimus in two to three years in factories.

Marketing Genius

It was like Musk and his team let analysts, potential future employees, the competition, and the rest of the public behind the curtains of how Tesla creates their AI, robotics, and so much more. Musk warned people on Twitter (TWTR) that the AI Day was going to be technical, boring for the general population who don’t really follow the company, but a focused talent recruitment event to showcase the groundbreaking AI they are trying to create. Over 100,000 people were watching on Tesla’s official YouTube channel during Tesla AI Day on a Friday night, not to mention all the other channels broadcasting the video, and it already has become the #6 video trending on YouTube in the last 24 hours.

I truly believe they will acquire more excellent engineering and software developer talent from this event. In my opinion, Tesla is the ultimate marketing genius and brand in culture today considering they don’t do commercials and completely flipped the car purchasing process on its head by not working with dealerships and instead using a direct-to-consumer model. And now Tesla for the past two years has acquired the best AI employee talent in the world by having their own employees showcase what innovative challenges they are trying solve and their impact on the world.

Optimized for Scale and Cost

Once again Musk and his engineers demonstrated throughout AI Day the consistent theme of Tesla is focused on optimization of scale and cost of whatever they manufacture. This time, it was their humanoid robot Optimus that demonstrated this mindset and strategy. Tesla took the AI that fuels the FSD for their Tesla cars and is inputting it into their humanoid robot. They are already working on reducing part counts and power consumption so the robot can operate for one full day on a battery charge. Musk announced on stage that the robot will be sold to consumers in the next 3 to 5 years, but I would rather be conservative and expect 5 to 10 years. Regardless, this robot is expected to only cost $20,000 to make, but I will estimate a higher price initially I don’t doubt Tesla will eventually get there.

The company continued to stress how there are several humanoid robots that have been created, like those of Boston Dynamics but none have been able to be created at scale and lost cost and generate productivity and economic value. Musk and his engineers spoke about how they want to continue to refine the robot and improve its capability and that its AI will do this. The robot will have Wi-Fi and LTE network connectivity one could assume it will be able to receive over the air software updates. Later in the show, after Tesla showed their first version of Optimus which is called Bumble-C they brought out their newer version that is more polished and more humanoid looking but cannot walk on its own just yet. I believe there are few companies that can deliver outputs of industry changing technologies in short periods of time, but Tesla is the definition of this, in my opinion.

Driven to Make the Unthinkable Become Reality

When investors, engineers, competitors, and the general population saw a dancing human on stage at Tesla’s first AI Day, they never thought they would be seeing a beta humanoid robot walking a year later. I still predict that there will be many doubters and critics of the capabilities of the robot, and if it will ever come to consumers and generate revenue. What they should have learned by now is to not doubt Musk, the talent he acquires, and the culture his companies operate within. Critics and competition didn’t take Tesla seriously when they wanted to be the first to start an entire EV industry, and there were similar critics of Musk’s Space-X company and Starlink satellite internet. Musk aligns all his wealth to the stock he holds in his companies, which aligns with accomplishing the commitments and goals he sets forth, which ultimately are to fuel the funds he needs to get humans to Mars. Critics called Tesla overvalued, a joke, not profitable etc. early in the 2000s and now it is a company on pace to generate billions of dollars in profit this year. The same thing was said about Jeff Bezos and his endeavor with Amazon (AMZN). I have said it in my articles before and I will say it again when we invest in stocks we invest in people.

What Was My Conclusion From AI Day and Will it Move the Stock?

My conclusion on Tesla’s second AI Day is that many people will overlook what Tesla was trying to achieve through the event. They will also overlook the underlining takeaways investors can gather from the event if they really took notes and paid attention to what the company was showcasing.

And so what did I learn with my note-taking and contemplation after watching the event? It was these five takeaways that I outlined in this article.

1. In my opinion, Tesla is stacked from top to bottom with the best talent in AI, manufacturing, robotics, and computing. The company also has a superior company culture and Musk may drive his teams hard and he also empowers them to succeed.

2. AI Day has to be one of the best talent acquisition events I have ever seen a company put on, and yet most investors won’t realize it.

3. Tesla does everything with the approach of optimization, scale, and lower costs. Investors should understand this equates to profits, profits, and more profits in the future.

4. Tesla is mission driven and focused on the future and solving the most complicated and ambitious technology goals of our era.

5. I wouldn’t bet against Musk in the long run.

My final conclusion of AI Day is that this event most likely won’t move the needle on the stock. Investors, analysts, and others will miss all the nuances and company culture the event demonstrated. It was an event that was eye opening just how far the company is from the competition and how uniquely it operates. The stock may jump a little in the short term if Tesla crushes September car deliveries, but this jump won’t be because of AI Day. My goal is to have Tesla in a strong position as what I have in Nvidia and Palantir, due to what I learned from AI Day. I wish I would have covered Tesla much earlier but you can’t change the past, only act in the present.