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☕ Tesla $20 trillion – how I get there

Jul 28, 2025

Howdy! 👋

I hope you had a fabulous weekend wherever this email finds you just as we did here in the PNW where the skies were a beautiful crystal blue, the wind cool, and the roads clear. 🏍️

I did have a good laugh when I rolled into the office this morning, though.

More than a few people told me to take some “more time off” like I did last week and, ironically, they might have a point…

The S&P 500 is tracking higher with 5 straight closes higher to new records. I see some shenanigans ahead but that’s probably minor.

Palantir touched $160 on its way to $200, a target I’ve had in place long before much of Wall Street could spell the company’s name.

Even the notoriously fickle Nasdaq has had 4 record closes, which is giving the permabear crowd fits right about now.

More than 80% of all S&P 500 companies that have reported so far have beaten expectations; if 80% is the final number for the quarter, it will mark the largest percentage of S&P 500 companies reporting a positive EPS surprise for a quarter since Q3 2023 (81%) according to FactSet.

In aggregate, companies are reporting earnings that are 6.1% above estimates, which is below the 5-year average of 9.1% and also below the 10-year average of 6.9%. Historical averages, btw, reflect actual results from all 500 companies, not the actual results from the percentage of companies that have reported through this point in time – an important detail. Also, according to FactSet.

To be fair, there are loads of people who still doubt what’s happening and you’re not alone if you’re one of ‘em.

Take a deep breath and remember something we talk about regularly.

Investing in optimism beats cowering in pessimism.

I bring this up because every investor has a choice.

This week especially.

You can either a) fight for Wall Street’s table scraps by allowing yourself to get dragged into the minutia or b) get on board with what I call the 5Ds – Digitalization, Defense, Diffusion, Dislocation, and Distribution – themes so big that they are changing the investing landscape and altering the course of humanity.

AI, in particular.

That genie is never going back in the bottle.

And the companies that matter?

They’re pulling away fast.

If you’re still waiting for a “perfect” entry… you may just miss the train.

Now, let’s talk Tesla and how I get to $20 trillion

I made an observation recently that caught a lot of folks’ attention, including … drum roll please … Tesla CEO Elon Musk himself, who not only liked my take, but also retweeted it and kindly took a moment to comment.

To say I was stunned is an understatement.

What did I say?

Just that Tesla could hit a $20 trillion valuation.

The super-savvy Stuart Varney doesn’t miss a beat and, of course, asked me about that this morning ahead of today’s opening bell along with my take on whether the stock market is in a “melt-up” and which big tech company will produce the best earnings. (Watch)

Obviously, we don’t have a lot of time on national TV so I thought you might find a bit more detail valuable as to how I “got there.”

Here are 8 reasons I see Tesla at $20T

1. The math works. $20T sounds outrageous at first glance. In fact, I couldn’t believe my own eyes and reran the numbers several times to be sure. Getting to $20T by 2040 requires just 17.5% compound annual growth from roughly $1T where Tesla is now. Apple did 20% for 15+ years and Amazon turned in 25% for over a decade. What people need to understand is that Tesla doesn’t have to go bonkers every year or every quarter, just be directionally right and compounding will do the lion’s share of the lifting.

2. Tesla isn’t a car company. It’s a platform ecosystem the way the iPhone is. Every vertical can be a multi-trillion-dollar winner on its own:

Autonomy (FSD + Robotaxi)
AI Infrastructure (Dojo)
Energy (Megapacks + Solar)
Storage (Powerwall, Grid services)
Manufacturing-as-a-Service
Robotics (Optimus)
Software (Subscription stack)
Insurance/Finance
Supercharging Network
Communication (Grok, X)
Super App

3. Tesla is AI inference in the real world. Not limited to screens and servers. It has a real-time (rapidly growing) feedback loop that crosses every vertical. There are also custom chips and constantly accelerating hardware that are not yet even remotely factored into the company’s stock price.

4. Robotaxi is an iPhone moment. I made this observation several years ago and it’s increasingly becoming a mainstream “take” but few people really understand just what a game changer this is. Robotaxi becomes an integrated, rolling, real time platform combining the iPhone, Uber, Google and more all in one. Margins go ballistic and unit economics go full send. I believe Tesla could earn more per car per year than conventional car makers earn on 10 vehicles in 10 years. Think about that one for a moment.

5. Tesla could be the world’s largest utility and not own a single wire. The Megapack business is accelerating with energy stabilization and storage having a multi-trillion addressable market all by themselves worldwide. Antiquated energy infrastructure… pfffffft. Charging network, storage and transmission… oh, yeah.

6. The Optimus Factor. Tesla’s Optimus isn’t just a robot like most think. I see it potentially redefining global labor economics. Imagine 1 billion robots are deployed by 2040 – a figure that I think is conservative btw – that’s a cool $10T in gross profit at a margin of just $10,000 per unit – which I also think is likely very conservative as it scales.

7. Betting against Musk is like betting against (Steve) Jobs. People thought Tesla was a pipe dream in 2010. They thought it was on its last legs in 2015. Many thought it was simply hype in 2020. It is a cross industry, globally redefining company that has already dramatically changed our world and will continue to do so for decades.

8. Disruption always looks absurd until it’s not. Investors get so caught up in the past and the minutia that they cannot see the forest for the trees as the old expression goes. Apple was a “computer company” once. Amazon, a “bookseller”… once. Nvidia, just “gaming” cards… once. No doubt you see my point.

Change is not unusual.

Just uncomfortable… typically for the old guard.

Btw, history suggests that there are 10-15 “Tesla’s” out there right now in various stages of maturity. Hopefully, you own a few of ‘em. If not and you’d like to, you may enjoy One Bar Ahead® where I make it a priority to find ‘em long before the rest of the world catches on. Palantir, among others, is another great example.