2 Popular AI Stocks to Sell Before They Fall 65% and 73%, According to Certain Wall Street Analysts

Current shareholders bothered by the possibility of a major correction should trim their positions, especially if those positions account for a large percentage of their portfolios.

Alternatively, investors comfortable with volatility should lean into the stock on dips. For instance, consider buying a small position if the share price falls 10%, and buying a little more if it drops another 10%.

Tesla reported dismal results in the fourth quarter, missing estimates on the top and bottom lines. Revenue increased only 2% to $26 billion as the company lost market share in electric vehicles (EVs), and operating margin contracted 2 percentage points as its average selling price declined due to price cuts. Adjusted earnings increased a little faster, rising 3% to $0.73 per diluted share, but only because Bitcoin added $600 million to net income.

However, the long-term bull case remains intact. Tesla is well positioned to monetize autonomous driving technology after spending billions of dollars over the last decade to develop full self-driving (FSD) software and hardware. The company has more driving data than peers like Alphabet‘s Waymo because its fleet is several times larger and constantly collecting information. That gives the company an advantage in training artificial intelligence models.

With that in mind, CEO Elon Musk is confident it will introduce robotaxi services (autonomous ride-sharing) in Austin, Texas, and several other U.S. cities at some point in 2025. That could eventually be a very large revenue stream.

ARK Invest thinks robotaxis will be a $10 trillion market by the early 2030s. So, Musk believes that 2025, when viewed in hindsight, may be “the most important year in Tesla’s history.”

He also sees a $10 trillion market opportunity in humanoid robots, and he thinks Tesla’s Optimus is the “most advanced humanoid robot by a long shot.” He says Optimus will be doing useful work in the company’s factories before the end of 2025,, and it may begin selling the robot to customers in late 2026. And Musk believes it will eventually be Tesla’s most valuable product.

Wall Street expects adjusted earnings to increase 19% in the next four quarters. That makes the current valuation of 160 times earnings look outrageously expensive. The stock may decline sharply if Tesla hits any speed bumps, though I doubt shares will fall 65%.

More importantly, I think Tesla (like Palantir) will be worth more in the future. So, patient investors comfortable with volatility should look for dip-buying opportunities.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Trevor Jennewine has positions in Palantir Technologies and Tesla. The Motley Fool has positions in and recommends Alphabet, Bitcoin, JPMorgan Chase, Jefferies Financial Group, Palantir Technologies, and Tesla. The Motley Fool has a disclosure policy.

2 Popular AI Stocks to Sell Before They Fall 65% and 73%, According to Certain Wall Street Analysts was originally published by The Motley Fool