Could This Be the Best Reason to Buy Tesla Stock Hand Over Fist? (Hint: It's Not Robotaxis.)

Key Points

• Several analysts believe the humanoid robotics market could be larger than the robotaxi market.

• Tesla has ambitious plans for its Optimus humanoid robots.

• However, the company faces several challenges to achieve significant success with Optimus.

Tesla (NASDAQ: TSLA) fans should find it easy to identify reasons to buy the stock. For one thing, its shares remain roughly 34% below the previous high. Anyone who believes in Tesla's long-term growth prospects will likely view this as a great opportunity to buy the stock at a discount.

One prominent Tesla bull, Ark Invest founder and CEO Cathie Wood, thinks the autonomous ride-hailing (robotaxi) market makes the stock a fantastic investment opportunity. However, there's a good case to be made that there's an even better reason that makes Tesla a stock to buy hand over fist right now.

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Bigger than robotaxis?

Wood and her Ark Invest team believe the the robotaxi market could skyrocket to around $4 trillion by 2030. They look for Tesla to be the biggest winner in this market, thanks to the company's lower-cost technology and scalability.

However, Ark Invest is much more optimistic about the robotaxi opportunity than most analysts. Fortune Business Insights projects that the robotaxi market could be nearly $119 billion by 2030. Market researcher Research and Markets thinks the robotaxi market could expand by a compound annual growth rate of 45.2% and hit $124.9 billion by 2034.

Tesla could have an even larger opportunity. Morgan Stanley projects that the humanoid robotics market could top $5 trillion by 2050. The financial services giant thinks that the adoption of humanoid robots will accelerate in the 2030s.

Citigroup analyst Wenyan Fei pegs the number at closer to $7 trillion by 2050. He and fellow analyst Rob Garlick think that humanoid robots will be especially helpful in providing home services. They envision the robots folding laundry, mowing lawns, and caring for older adults. And Tesla could be a big player in this market. Fei named Tesla's Optimus robot as "definitely one of the leaders for the market."

Want an even more bullish estimate of the humanoid robotics market? Ark Invest believes the global opportunity could eventually be in the ballpark of $24 trillion. Unsurprisingly, Wood's team thinks that Tesla "could capture a significant share of this multi-trillion-dollar market."

Image source: Getty Images.

Tesla's Optimus ambitions

Tesla certainly has grand ambitions for Optimus. CEO Elon Musk said during the company's 2024 fourth-quarter earnings call that Optimus could eventually generate more than $10 trillion in revenue. He acknowledged that his revenue predictions "sound absolutely insane." However, Musk added that he thinks "they will prove to be accurate."

If Musk's revenue estimate for Optimus is anywhere close to realistic, humanoid robots will be more important for Tesla's future than electric vehicles or robotaxis. But a lot has to happen first.

Musk predicted in Tesla's 2025 Q1 earnings call that the company will produce 1 million Optimus units per year by 2030, and perhaps as early as 2029. Once that production goal is reached, he thinks the production cost for its humanoid robot will be under $20,000. While the list price will be higher than that, Optimus could be affordable for many families.

Tesla plans on using Optimus extensively internally, too. Musk said in the Q1 call, "We expect to have thousands of Optimus robots working in Tesla factories by the end of this year."

The best reason to buy Tesla stock hand over fist?

Is the potential for success in the humanoid robotics market the best reason to buy Tesla stock hand over fist right now? Maybe, but I think investors should be cautious.

For one thing, Tesla is running into problems with its Optimus program. Milan Kovac, the senior vice president in charge of Optimus, left unexpectedly. Production has also reportedly been delayed as the result of a design change.

I suspect Tesla will be able to resolve these issues. However, the bigger challenge for the company is competition. With a market opportunity this large, multiple companies are in the race. Morgan Stanley believes that China is in the driver's seat in developing humanoid robots.

It's also important to remember that the huge humanoid robotics market estimates are for 25 years in the future. Investors should maintain a long-term perspective, but Optimus would need to move the needle in a significant way much sooner for it to be a major factor in buying the stock now.

Still, progress in humanoid robot development is something to keep your eyes on. If Tesla can sell a flexible, multi-purpose Optimus for $30,000 or so by 2030, the company could deliver much greater growth in the next decade than many investors expect.

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Citigroup is an advertising partner of Motley Fool Money. Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.