What We Learned This Week

The Tesla Story Continues to Evolve: Tesla released its 2024 delivery numbers late last week, reporting its first annual decline in deliveries on record. The company delivered 1.77 million vehicles for the year, down from 1.81 million in 2023. While analysts had anticipated a drop, the final figure came in slightly below consensus estimates. Unsurprisingly, Tesla’s stock took a 7% hit following the announcement, particularly after its strong run in recent months. What stood out, however, was the stock’s quick rebound.

Tesla’s valuation has long defied traditional auto industry comparisons, often reflecting tech-like multiples rather than those of a manufacturing company. Historically, weaker delivery figures would temper investor enthusiasm and act as a reminder that Tesla’s current business is still primarily about selling cars. But the narrative seems to have shifted—perhaps dramatically. Following the delivery shortfall, several analyst notes highlighted Tesla’s expanding AI capabilities and the vast potential of autonomous vehicle markets. This kind of commentary reignites investor excitement, conjuring visions of driverless taxis and autonomous robots, all donning the Tesla logo. Add to that the alliance Elon Musk has cultivated with incoming President Trump and the regulatory tailwinds that could come with it, and Tesla’s future potential begins to feel more tangible—at least in theory.

In practical terms, Tesla's core auto business remains strong despite some year-over-year contraction. They continue to dominate the EV market and maintain a significant lead in autonomous driving technology. But even with this strength, valuing Tesla solely based on its car business suggests the stock is significantly overvalued. Conversely, if Tesla’s AI ambitions come to fruition, the company could become one of the most transformative enterprises of our time. At its core, investing in Tesla today feels akin to holding a long-term call option on a powerful AI future. If that vision materializes, today’s valuation might look cheap in hindsight. If it doesn’t, the correction could be severe. Betting against Elon Musk has rarely been a winning strategy, but investing in Tesla requires a long time horizon and a willingness to weather considerable volatility.

Nvidia Keeps Pushing the Limits: Nvidia made headlines at this year’s Consumer Electronics Show (CES) in Las Vegas with the announcement of new gaming chips and a personal desktop AI supercomputer capable of running complex AI models locally. While data centers and AI now drive the bulk of Nvidia’s revenue, the company’s origins are rooted in consumer tech, having revolutionized gaming in the late ‘90s with its groundbreaking graphics cards. Despite gaming now making up only 10% of its revenue, it remains a key part of Nvidia's brand identity. The new gaming chips unveiled at CES use the same Blackwell architecture that powers Nvidia’s next-gen AI graphics cards, scaled down for personal PCs and delivering exceptional performance.

The standout announcement was Nvidia’s personal AI desktop supercomputer, which resembles a Mac Mini but packs a punch with up to 1 petaflop of AI performance—capable of performing 1 quadrillion calculations per second. While these products may not have a material impact on Nvidia’s financials compared to its dominant data center business, they underscore the company’s ongoing commitment to innovation across segments. Whether in gaming, enterprise, or personal AI computing, Nvidia continues to push technological boundaries and set the standard for what’s possible in the AI era.

Meta Shifts the Moderation Narrative: Meta announced significant changes to its content moderation approach this week, particularly for Facebook and Instagram. The company is moving away from third-party fact-checking services that determined the accuracy of user posts and will instead adopt a "community notes" system similar to X (formerly Twitter). This system allows users to add context, links, or additional information to posts rather than relying on platform-enforced decisions about content validity. Meta has faced criticism over the years for perceived censorship and struggles to balance free speech with creating a safe user experience, especially during major events like elections. The new approach shifts the responsibility of content interpretation to the users, aiming to reduce perceptions of bias in moderation decisions.

The move is seen as a step toward aligning with the incoming administration's emphasis on free speech and minimizing the risk of appearing politically biased. While this change has sparked strong opinions on both sides of the issue, the broader impact may be less dramatic than headlines suggest. For platforms as large as Facebook and Instagram, user engagement typically remains steady despite controversy, as the majority of users are often unaffected by the nuances of content moderation changes. Ultimately, this shift seems designed to mitigate backlash while maintaining overall platform stability and user trust.