It wasn’t all too long ago that some forward-thinking investors expressed their view that Tesla (NASDAQ:TSLA) was as much of a tech company as it was an automobile maker. Indeed, a Tesla is “fully loaded” on the tech, whether we’re talking about the exterior, interior, or under the hood. Indeed, it’s what’s under the hood, I believe, that sets Tesla apart from the rest of the pack in the auto scene.

Whether we’re talking about the autonomous capabilities or the intriguing hardware, Tesla drivers are pretty much driving in a giant computer. But can the same be said for just about any modern car? Possibly. Tesla vehicles aren’t the only ones with an Autopilot-esque feature.

Reportedly, Consumer Report deems Tesla’s driver assistance system as good but not the best. Of course, there’s still much work to be done as Tesla races toward a future that sees Cybercabs on more roads. As Cybercab goes full speed ahead for a big piece of that robotaxi market, perhaps things could quickly change.

With hefty AI investment from Elon Musk and perhaps a smarter Tesla, it may not be all too far off. Indeed, as we move further into the AI age, one that could find its way into a “physical form” (think robots, cars, and all the sort), Tesla stands out as a major potential winner. After all, there is no bigger robot on the market than a modern vehicle!

Combined with Tesla’s Optimus humanoid robot, which could be coming to a household near you, it seems like Tesla stock is not just an AI play but akin to an AI ETF (exchange-traded fund), with numerous ways to profit and grow from the meteoric rise of the technology.

Wall Street pro sees Tesla stock as an “embodied” AI ETF—he’s right.

Morgan Stanley (NYSE:MS) analyst Adam Jonas views Tesla as like an “AI ETF,” and I’m inclined to agree, even if it’s not yet a profound money-maker for the firm.

Additionally, he sees an opportunity for Elon Musk’s empire to become a leader in “embodied AI,” or robotics. The firm seems to have made all the right bets in all the right places to be one of the more compelling diversified AI stocks in the market.

Indeed, autonomous vehicles may very well be scratching the surface of the AI potential the firm is capable of. House robots, AI-powered energy optimization, AI chips, AI data centers, and other efforts not yet on our radar (perhaps a Tesla language model catered to drivers) could also play a larger role in the automaker’s future.

Is this AI ETF too expensive at current prices?

Tesla stock is now down over 18% from its year-end all-time high, just a few dollars shy of the $500 per-share level. To some, this dip is a great buying opportunity to ride the “embodied” AI play higher in what could be another big year of the AI boom. However, the valuation remains steep, and the volatility is stomach-churning, with a 2.3 beta, entailing a far bumpier ride than the S&P 500.

Also, if Trump tariffs are implemented, demand for vehicles could take a big hit. Of course, given Elon Musk’s friendship with President Trump, I do think the last thing Trump would want to do is to put forth policies that weigh on Tesla vehicle sales. Either way, I think Tesla is an interesting pick-up despite tariff uncertainties. At the end of the day, it’s a go-to robot stock (or ETF-like bet) that may very well deserve to trade at close to 14 times price-to-sales (P/S).

Of course, the big question is what the new product timeline will look like, given the potential for road bumps along the route to a robotics revolution. If you’re fine with volatility and are keen on betting big on the physical AI phase of the revolution, perhaps waiting for a bit more of a pullback, perhaps closer to $350 per share, could be a smart move. In my view, TSLA stock is mildly expensive, with a technical picture that’s not the best in the world.

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