Oppenheimer remains on the sidelines following Tesla’s quarterly results

Oppenheimer says that with Tesla (TSLA) highlighting margin crosswinds and characterizing 2024 as a transition year, it believes the story hinges on executing against its AI vision. Management highlighted Dojo as a “big risk, big reward” project and indicated it was hedging its AI program via ongoing hardware purchases from Nvidia (NVDA). Tesla also pointed to a complete rewrite of its FSD software architecture to support acceleration in decision making and learning cycles. While Oppenheimer believes the company is making progress on cost reduction and AI platform enhancement while generating free cash flow, the time to monetizing its AI expertise along with its mass-market vehicle remains 2-3-plus years away. As the firm lowers estimates, it remains on the sidelines with a Perform rating on the name and expects moderating investor expectation to weigh on shares.