Tesla Stock vs. Alphabet Stock: Wall Street Only Thinks 1 Will Head Higher From Here

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Self-driving vehicles will be a priority for the incoming presidential administration’s appointees at the Department of Transportation, according to reports. That could mean we’ll see an explosion of autonomous vehicles on roads across the country over the next few years.

In the race to develop fully self-driving cars, there are two clear front-runners today: Tesla (NASDAQ: TSLA) and Alphabet‘s (NASDAQ: GOOG) (NASDAQ: GOOGL) Waymo. But Wall Street only sees one of those company’s stocks moving higher over the next year.

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  • Among the 57 Wall Street analysts that follow Tesla, the median 12-month price target for the stock is $265. That’s 24% lower than its price as of this writing.

  • Among the 66 analysts covering Alphabet, the median 12-month price target for the stock is $210. That’s 24% higher than its price as of this writing.

Here’s what investors need to know.

Image source: Getty Images.

The big thing that has driven Tesla’s stock higher is the expectation that it will successfully implement a “full self-driving” system, and that it will be able to push that capability out to every Tesla on the road with a simple software update.

The company held a big event in October at which CEO Elon Musk unveiled the Cybercab, a self-driving coupe, and the Robovan, a 20-seater vehicle with the sleek profile of a high-speed train engine. Musk also said he expects fully autonomous Model 3 and Model Y vehicles will be operating as driverless taxis in Texas and California by next year and anticipates that Cybercabs will go into production “before 2027.”

Tesla’s strategy puts it at a huge disadvantage in the short term. Since it’s selling a consumer vehicle, it can’t put all the technology being developed by its competitors into its cars. Specifically, it’s not using lidar, which emits light beams in all directions, gathering data that can be used to create 3D maps of the emitter’s surroundings in real-time. Musk has called lidar a crutch. He believes Tesla can solve self-driving’s “seeing” problems with just cameras and radar. If Tesla added lidar systems to its cars, that would drive their prices way up.

Additionally, since Teslas are driven all over the world, pre-mapping relatively small areas in Texas and California to make it safe for Teslas to drive autonomously within them won’t move the needle for the business. It needs a more advanced solution capable of responding correctly across every conceivable condition and situation before it can roll out a software update that makes full self-driving available to Tesla owners.

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