The $1T Robotaxi Boom Is Here. These 2 Stocks Look Better Than Tesla

Tesla is pushing robo-taxis into more cities, and if this market becomes anywhere near as big as Wall Street expects, there could be a lot of money made here. But, maybe not where everybody is actually looking, because I ran the obvious robo-taxi stocks through the data, and Tesla, Alphabet, and Uber all landed basically in the same place, average. The two stocks I find much more interesting sit underneath this entire buildout. One can potentially make money no matter whose robo taxi ends up winning, and the other is one of the strongest rated stocks in the entire market. Now, let's start with what Tesla just changed. But, before we get into that, feel free to hit the like button below. It helps YouTube push this kind of data-driven breakdown to more investors just like you. Now, Tesla is expanding its autonomous ride services beyond its original markets and into additional cities. That matters because robo-taxis stop being an interesting technology demo once companies can repeatedly launch them into new markets. Now, every new city tests a different mix of roads, traffic, regulation, weather, and customer behavior, and the potential price here is enormous. Morgan Stanley estimates that if autonomous ride providers get paid per mile, this could be a market worth over a trillion dollars a year in the US alone. And if robo-taxis become even a fraction of that, you're looking at an entirely new layer of transportation infrastructure being built in real time. And what it does is it creates opportunities far beyond Tesla, which I'm going to share with you very soon here. Now, there are basically three ways to invest in this. Number one, you can own the company building the robo-taxi. Number two, you can own the network that's delivering the rides themselves. Or, number three, you can own the companies selling everybody the hardware they need to make the whole thing work. And that third group, honestly, is where things get very interesting. But to truly understand why perhaps we should start by looking at the obvious plays like Tesla. So let's take a look at those now. But before that I should mention that our editor-in-chief discusses stock market news and his stock picks in detail during his free weekly live trainings. You can join him live every Monday for free, but you do need to register to join. So just scan the QR code on the screen right here or go to wallstreetzen.com/live to sign up. All right, let's take a look at Tesla. Again, ticker symbol TSLA. Now if Tesla can turn millions of vehicles into autonomous revenue producing assets, the economics of this company could look completely different in just a few years time. But before I even talk about our quant rating for Tesla, here's why I'm cautious today. Tesla pulled in $103.6 billion in revenue over the past year, but only $3.8 billion in profit, which is a margin of just 3.7% and that is also backed up by a trend. Earnings actually fell 35.52% over the last 12 months, which is a real deceleration from Tesla's own 5-year average growth rate of 9.4% and the stock's already down almost 19% over the last 3 months while still trading at roughly over 300 times earnings. And when you look at the analyst picture, it may seem a bit bullish at first. The stock does have a consensus recommendation of a buy. But if you dig deeper and you actually see the average price targets, they're only calling for roughly 10% upside in the coming year. And if you also look closer at the individual recommendations, you'll see that the largest single group, nine of 22 analysts, actually recommend it as a hold. So perhaps a few bullish voices aren't really telling the whole story here, which brings us around to our Zen ratings. A quick explanation since it's our first stock today. Zen ratings grade every stock in A through an F using over 100 factors to estimate its odds of beating the markets, and underneath that grade sits seven different component grades, covering things like value, growth, momentum, and sentiment. So, you can see exactly where the strength or weakness actually lives. Now, Tesla lands at a C, a hold recommendation. And looking at the underlying component grades here, the picture lines up with what we just saw. It has a D grade in value, momentum, and sentiment, and everything else is sitting at a C grade. So, despite the buy rating on paper, our model isn't seeing the strength to back it up yet. Now, what could change all of this? Analysts expect Tesla's earnings to grow 36.93% a year going forward, which is an exceptional pace. Now, if that shows up in the actual numbers instead of just the headlines, this rating actually has some room to move, which is exactly why it's worth checking daily instead of just going off a headline that you saw once about Tesla. So, the bottom line here is Tesla is doing something genuinely important with its robo-taxi expansion, but the stock itself today is a hold recommendation, not a buy. It's a name to watch as the rollout develops, for sure, but not the strongest buy on this list. Now, you're going to find a similar story with other big names like Alphabet and Uber. So, let's move through these a bit quicker. Alphabet comes in at a C grade, a hold recommendation. And again, looking at the component grades here, sentiment does stand out at an A grade, is clearly optimistic here, and that does track given Waymo's head start in the autonomous rides. Wall Street agrees, at least on the surface, as well. The aggregate call here is a strong buy recommendation with an average price target implying about 25% upside. But, here's the catch. Alphabet's own earnings are actually forecast to shrink 6.4% a year going forward, and insiders have been net sellers over the past 12 months. So, that strong buy recommendation comes with some real cracks underneath it. So, well, yes, Alphabet has the Waymo edge and a standout sentiment grade between the earnings forecast and the insider selling, I wouldn't call this a strong setup either. Now, Uber tells a similar story here. Another C grade, a hold recommendation. And if you look at the component grades, safety and financials are the bright spots at a B, but growth and momentum lag at a D grade. And I'll be real here. Wall Street's even more bullish on Uber, a strong buy call with an average target implying about a 35% upside. But again, the numbers undercut this enthusiasm. Both earnings and revenue are forecast to grow slower than Uber's own industry and the broader market in general. And just like Alphabet, insiders have been net sellers over the past year. Now, Uber's balance sheet is solid and their strategic position, plugging into whatever wins the robotaxi race, does make sense. But, like Tesla and Alphabet, the numbers say watch, not chase this stock. So, that's three of the biggest names in this story, Tesla, Alphabet, and Uber, and they all three land in the same place, a hold recommendation. And yes, there are strong buy calls here from Wall Street, but our data just isn't backing that up yet. So, instead of betting on who wins the robotaxi race, I went looking for companies that get paid no matter who wins. And that's where the next two picks are going to come in. And if you're getting value from this type of video, consider subscribing to this YouTube channel. We do this kind of grounded, data-driven research every single week, and I'd love to have you back for the next video. All right, time for our first stock pick. So, the first pick here is Magna International, ticker symbol MGA. Now, Magna is one of the largest auto parts suppliers in the world building body exteriors, structures, and systems that go into vehicles across nearly every single major auto maker. And here's why that matters for this robo-taxi theme. Magna doesn't need Tesla to win or Waymo or anybody else. As cars get more sensors, more cameras, more autonomous capability, Magna supplies the physical components that actually make this possible, no matter whose badge ends up on the actual vehicle. And the numbers back up the idea that this is a well-run business, not just a thematic bet here. The stock is up over 40% over the past year. But signs indicate that despite this run, it may not actually be overvalued. On valuation, Magna actually trades it under 24 times earnings and just over 0.42 times sales, which is cheap for a company with that kind of dividend track record. And speaking of, it pays out a 2.26 dividend yield, and that dividend hasn't dropped by more than 10% at any point in the last decade. It's actually grown consistently the entire way through. Now, when you look at the analyst picture, it's kind of a mixed bag. The stock has a hold consensus among 11 different analysts, but it is worth noting that even several of the hold recommendations see potential upside in the coming year. And the most bullish voice in the room is among the better-rated analysts that we track, suggesting that the stock could see a nearly 20% upside in the coming year. But ratings shed light where the analyst picture is a bit unclear. Because Magna actually comes in at a strong buy recommendation or an A rating, which is our highest grade possible. Now, if you look at the component grades, you can see it bolsters the A grade. Safety is the standout at an A, while value, growth, and financials, and AI are solid Bs. Magna is also ranked number one of 42 stocks in its auto part industry. And honestly, that disconnect here is worth paying attention to. A single 12-month price target is a narrow snapshot, but our model is weighing over 100 different factors, including balance sheet safety, dividend durability, and standing relative to its peers, not just where one analyst thinks the stock lands a year from now. And historically, stocks that earn a strong buy grade from us have averaged 28.5% per year in re- A very different number than the 5% price target. And that's exactly the kind of game where I think our system is picking up a deeper picture than the headline numbers capture here. So, the bottom line, Magna gives you exposure to the autonomous vehicle buildout without needing to pick a winner, a dividend that's actually proven durable for a decade, and a rating that says the business is stronger than its price target suggests. That combination right there makes it a legitimate pick. Now, on to a pick that I'm sure will surprise you. It's a stock most of you probably know, but you probably never expected to see it in a robo taxi video. And before we get to that last stock, one quick thing. If you want to stay one step ahead of the market, then join us live every single Monday. That's when we share an updated market outlook and trading plan to outperform. This is also when my YouTube co-host and our editor-in-chief, Steve Wrightmeister, shares his trade of the week based on our proven Zen ratings quant model and his greater than 40 years of investing experience. Now, it's a free event, but you do need to register. So, just go to wallstreetzen.com /live or click the link in the description, or scan the QR code right here if you're on your phone. You can just pause the video for a moment, click or scan, sign up, and then we can see you on Monday. All right, and the last stock pick here is, drumroll, Micron. Ticker symbol MU. Now, I know your first question might be, what the heck is Micron doing in a robo taxi video? Because, true, Micron is one of the world's largest makers of memory chips, not of robo taxis. But, here's the connection to today's theme. Autonomous vehicles are essentially rolling computers, right? Constantly processing data from cameras and sensors in real time, and that takes a ton of what? Memory. Now, Micron already ships automotive grade memory built for exactly that. But, the bigger opportunity sits on the other side of the equation. Training the AI models that power self-driving systems takes massive data center infrastructure, and Micron's high-bandwidth memory is already built into the platforms companies use to train these models. So, Micron gets paid whether the car is doing the thinking or the data center is. And the underlying business here is firing on every cylinder right now. Micron's trailing 12-month earnings came in at a whopping $50.5 billion, up 701% year-over-year. And last quarter alone, earnings grew 105% from the prior quarter. And profit margins sit at just under 56%. Now, looking forward, analysts expect earnings to keep growing faster than both its own semiconductor industry and the broader market. And again, the same story on revenue here. And despite the stock already being up close to 700% over the past year, it's still trading at a PEG ratio of just 0.5. A sign that the market may not have fully caught up to the growth yet. The aggregate call from 26 different analysts comes out to a strong buy recommendation, and 17 of those recommended as a strong buy outright. Now, Goldman Sachs is the lone holdout among the major banks with a hold recommendation, but that's very much the exception here. Now, the average price target sits about 50% above today's price, and the top estimates suggest the stock could see greater than 100% upside in the coming year. And unlike Magna, there's no disconnect to explain here. Our Zen rating agrees with Wall Street completely. Micron also comes in at an A grade or a strong buy recommendation. It ranks in the top 1% of all stocks that we track. That means that fundamentally speaking, it's stronger than 99% of stocks out there. And the component grades show the balanced strength that you'd expect in such a highly rated pick. Growth and financials both grade out at an A with value, momentum, and sentiment all solid B grades. Now, the honest weak spot here is worth flagging. Safety grades out at a D. So, this isn't a stock without risk. And interestingly, the AI component grade itself is only a C. So, the rating isn't being propped up by the AI narrative. It's earning its grade from real growth and real financials. And that's actually what makes me most confident in it. The case for Micron doesn't depend on robo-taxis working out. The AI infrastructure boom alone is already driving this business, and autonomous vehicles are just one more source of demand stacked right on top. Now, of everything we covered today, Micron is the one where the fundamentals and the analyst targets and our own rating all point in the same direction, which is why I think it's the strongest idea on this list. All right, to wrap this up in nicely in a bow, let me leave you with these four things to watch from here. Number one, how quickly Tesla adds new cities. Number two, how fast Waymo expands. Number three, which autonomous fleets Uber adds to its platform. And number four, especially what semiconductor and automotive suppliers say about the demand. Because the company supplying a technological boom often starts seeing the money before investors fully appreciate where it's actually going. So, that's the robo-taxi opportunity as I see it right now. Now, I'd love to hear your take. Do you think investors are better off looking at the obvious stocks or do you prefer less obvious beneficiaries to this boom? And if you have another stock you'd like to add to the mix, please let me know. Do Drop a comment below so everybody can hear about it. And if you're looking to explore more timely stock themes, then I strongly recommend check out my recent video regarding another Elon Musk fueled stock catalyst, the multi-billion dollar chip factory he recently announced. It's on your screen right now.