Elon Musk believes Optimus robots could drive Tesla to a $25 trillion valuation, exceeding half of the current S&P 500’s worth

According to FactSet, the collective worth of the S&P 500 presently stands at $45.5 trillion. Elon Musk, the CEO of Tesla, made a bold assertion during the company’s 2024 annual shareholder meeting in Austin, Texas. He expressed his “pathological optimism” and described Tesla’s trajectory not merely as a new chapter but as the beginning of an entirely “new book,” with Optimus, their humanoid robot, playing a significant role.

Tesla initially introduced its plans for humanoid robots in 2021 during an AI Day event, where they showcased a sleek androgynous robot resembling a dancer in a unitard. In January, Tesla released a demo video featuring Optimus robots folding laundry, drawing criticism from robotics engineers who pointed out that humans were controlling the robots, rather than them being autonomous.

During the shareholder meeting, Musk refrained from providing specific details regarding Optimus’s current capabilities but suggested that they could eventually perform tasks akin to R2-D2 and C-3PO in Star Wars. These tasks might include cooking, cleaning, factory work, or even educational functions for children.

Musk believes that Optimus could serve as a catalyst for lifting Tesla’s market capitalization to $25 trillion in the future. Addressing the audience primarily composed of enthusiastic supporters at the Gigafactory auditorium, Musk pledged that Tesla would commence “limited production” of Optimus by 2025 and initiate testing of humanoid robots in their factories next year. He anticipates having “over 1,000, or a few thousand, Optimus robots working at Tesla” by 2025.

Musk’s ambitious claims are characteristic of his style, although some have not materialized in the past. Achieving a $25 trillion market capitalization would position Tesla at approximately eight times the value of Apple, the current largest company by market cap, just ahead of Microsoft.

While Musk did not specify a timeframe for reaching the $25 trillion valuation, he suggested that autonomous vehicles could drive Tesla’s market cap to $5 trillion to $7 trillion, echoing predictions made by Cathie Wood, CEO of ARK Invest. Musk’s remarks came after a shareholder vote reinstated his $56 billion pay plan, following a court order to rescind it.

Despite Tesla’s shares dropping by 27% this year due to various challenges, including sales decline and increased competition, Musk remains optimistic about the company’s future. He emphasized Tesla’s advancements in silicon development, surpassing Nvidia in terms of inference, which drew attention considering Nvidia’s significant growth driven by demand for its AI chips.

However, concerns have been raised about Musk’s focus on Tesla amidst his other commitments, including SpaceX, The Boring Co., Neuralink, and xAI. Musk reassured shareholders of his importance to Tesla’s future, emphasizing his role as a driving force for innovation.

In the competitive landscape of humanoid robots, Musk acknowledged other companies’ pursuits, including Boston Dynamics, Agility, Neura, and Apptronik. He underscored the importance of Tesla’s ability to outpace competitors and deliver superior products in the market.

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