Investing.com -- William Blair initiated coverage of Tesla (NASDAQ:TSLA) with an Outperform rating, driven primarily by what it views as the underappreciated potential of Tesla's energy storage business.
According to the firm's analysts, Tesla Energy—particularly its Megapack and Powerwall products—could become a significant growth driver, especially as expectations for the electric vehicle (EV) segment moderate in the near term.
"We view Tesla Energy as the most underappreciated component of the Tesla story and expect the narrative will shift toward the energy storage business in light of tempered EV expectations in the near term," William Blair states.
The analysts at William Blair highlighted three key factors that make Tesla's energy storage business a compelling investment opportunity: the need for grid stabilization, the expansion of data centers, and the integration of renewable energy sources.
These elements, combined with Tesla's broader automotive business and emerging opportunities in artificial intelligence, robotaxis, and robotics, are seen as positioning the company as a technology leader with what William Blair describes as an "Apple-esque ecosystem for the future of energy."
The firm elaborated on this comparison by stating, "Energy is the foundation for life, an abundance or lack of which determines how far society can reach on Maslow's hierarchy of needs."
They note that Tesla's approach to energy—through more efficient EVs, energy storage solutions, and futuristic innovations like robotaxis and humanoid robots—aims to revolutionize how energy is created, stored, and utilized, with broad societal implications.
While Tesla's current valuation might seem high by traditional metrics, William Blair argues that this premium is justified.
"Using traditional comparable analysis with auto or even tech, we understand the difficulty justifying the valuation, but in our opinion, this misunderstands the Tesla story," adds the firm.
"We believe the halo effect created by Musk, the company’s culture of first principles, and the technology advantages it has established warrant its significant valuation premium."