While I expect Street EPS and revenue estimates for 2025 to be revised downward following the March earnings report, that reality is largely noise for Tesla investors. The takeaway for most will likely be that 2025 is a throwaway year—one that sets the stage for a major rebound in 2026 and beyond. Tesla is in a unique position: its opportunity in physical AI is so compelling that investors are willing to look past what will likely be a difficult year. In my view, 2025 doesn’t matter; the business is poised for meaningful improvement starting next year.

​Don't let the recent downturn in the AI trade mislead you. The reality is that AI-powered service providers are struggling to keep up with demand, and AI infrastructure providers are unable to build capacity fast enough. All the potential that drove AI stocks higher in 2024 remains intact. At Deepwater, we continue to believe there are still 2–3 years left in this bull market.​

Tesla’s March deliveries missed expectations, down 13% y/y, largely due to brand damage and to a lesser extent production changeover. June will likely get worse before improving in September and we expect CY25 deliveries to decline 9%. However, CY26 is setting up to be a rebound year with 35% delivery growth driven by brand recovery, renewed EV demand, and a more affordable model. Longer term, the investment case continues to hinge on Tesla solving autonomy and scaling robotics.

Deepwater Frontier Tech Spotlight: Confluent Ticker: CFLT Market Cap: $7B Confluent is a software company that provides a real-time data streaming platform. This enables companies to stream, connect, process, and govern their data. What does this look like for customers? L’Oréal…

Modeling Tesla is getting progressively more difficult as they navigate this period of brand damage, increased investments, and macro uncertainty. On top of that, the company does not give detailed guidance. All of that said, we’re putting together our best guess on how the numbers shake out over the next couple of years. We expect CY25 revenue to be flat (vs. Street at +7%) and non-GAAP earnings to fall between $2.00–2.20 (vs. $2.74). In CY26, we expect revenue to grow 35% (vs. Street at 22%) and earnings to rise to $3.00–3.40 (vs. $3.76).

Deepwater Frontier Tech Spotlight: Vertiv Ticker: VRT Market Cap: $30B Vertiv is a global provider of power and thermal management solutions essential to the operation of data centers that are powering AI. As AI-driven workloads lead to exponential growth in…

This question comes at a time when Street estimates likely need to be revised downward. Following the expected reset on April 2nd, I estimate global demand for Tesla's will rise by approximately 1.5% over the next 12 months as a result of the new tariffs. While Tesla prices may inch up due to tariffs on auto parts, prices for other automakers are expected to increase even more—making Teslas relatively more affordable compared to the competition.