These are the kind of videos I love. I've got a huge show for you today as Cathie Wood lays out exactly why Tesla's pivoting so hard into robo taxi. And then we have Gene Munster who drops a stat which will blow your mind. And stay tuned as at the end we have a bonus clip from Cathie and Brett Winton from ARK Invest discussing Optimus. This is a juicy one.
Tesla's always been one of your big holdings. You know, in terms of just sales, obviously things have been challenged, but there's a lot of excitement about autonomy. There's a lot of excitement about the Optimus robot. What is your sense of where things stand at Tesla right now?
The EV sales environment has been challenged, but the market is shifting its focus to the robo taxi opportunity. So we're moving from 15% gross margins in autos, the hardware, to more of a SaaS model where robo taxis' recurring revenue model is those margins are more in the 70s and 80s. And I think as analysts understand that that's where Tesla is going and they start building in the model for robo taxis, they see a tremendous opportunity. So, it's been interesting to me to see upgrades even by some auto analysts now that they're beginning to understand that this is not an auto company. Maybe they're working with their tech analysts and understanding the stock a bit better.
So, when you think though about autonomous robo taxis and you think about robots, what does that look like? And some of the critics would say cars aren't working the way they're supposed to be working right now in terms of what's happening with the EV market and some of these other ambitious efforts are going to take a long time to get to a meaningful escape velocity.
Well, we're keeping an eye on how quickly Tesla's footprint is expanding here and it's expanding a lot faster, I think, than many people expected. And it's interesting to watch Waymo as well. We draw in Texas, we draw the footprint and they're competing with each other. Competition is a good thing. So I think this is actually going to happen faster than most analysts think in terms of the proliferation of robo taxis, especially if we get more federal legislation instead of just state by state. On the Optimus robot side, there's a lot of excitement in robotics that in the private markets has been a huge space this past year. We look at an Optimus robot. Our chief futurist Brett Winton working with Sam and Daniel have concluded that an Optimus robot is going to be 200,000 times more difficult to get working correctly relative to a robo taxi. You'll have waves of Optimus improving with time, but full human is going to be quite difficult. Nonetheless, the robots that we're seeing, they're starting to make waves.
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Cathie says Tesla's robo taxi business transforms 15% hardware margins into 70% plus software margins, and Optimus is 200,000 times harder to get working. So, you're going from a car business with 15% gross margins, which is actually really good for the automotive space, to something that looks more like a SaaS company. 70% 80% margins on robo taxi revenue. And I think that's why you're seeing automotive analysts suddenly get interested in Tesla again. Right now, Tesla sells you a car and that's mostly it. Maybe some software upgrades and some supercharging revenue. But a robo taxi fleet, that's revenue every single ride forever. The car becomes an asset that generates cash instead of something that depreciates in your driveway. And Tesla doesn't need to convince you to buy a $50,000 vehicle anymore. They just need the ride to be cheaper and more convenient than the alternatives. Now, the Optimus stuff is interesting, too, because ARK actually tried to quantify how hard it is. Brett Winton and the team have concluded that getting a humanoid robot to full capability is 200,000 times harder and more difficult than robo taxi. Think about what a robo taxi has to do. Navigate roads, follow traffic laws, handle weather. Hard but bounded. A humanoid robot is in your house. It needs to handle literally anything. Open any drawer, fold any shirt, navigate any room. The edge cases are essentially infinite. That math explains Tesla's prioritization. You've got one opportunity which they're on the cusp of solving, robo taxi, and achieving meaningful revenue with incredible margins, and another with even bigger long-term potential. That's Optimus, but it's still in the earlier development stages. Robo taxi is ready to scale now. Optimus is the next wave. Doesn't mean it's not valuable. If you're trying to figure out what moves the company forward in the next few years, it's robo taxi. The robots you're seeing now, the pick and pack stuff Cathie mentions, that's wave one. Full human capability comes later and Tesla's building towards it. Gene Munster is making the exact same argument about AI infrastructure. The market's measuring the wrong thing. Everyone's focused on training spend slowing down, but in reality actually using these models is already way bigger and it could get a lot bigger than that. Check out this clip from Gene.
Anyway, so if that's all the case and you mentioned that the AI trade has passed two hurdles and that it seems to still this tide be lifting all boats here. I mean there are some firms like your Deepwater Research which have underweighted certainly the Mag 7. What do you think is the third hurdle this year and are you sticking with tech broadly or more specifically?
So I think that the third hurdle, I guess more coming up more recently, of course we had the good news from TSMC. We had the good commentary from Nvidia at CES but the third is going to be about capex guidance. Just a quick view on that. It was 30% growth is what the hyperscalers analysts were expecting hyperscalers to grow in 2025 and 2026. 30% growth. That was the expectation a few weeks ago. That's now inched up to 34% and so that's moving higher. That's the next hurdle of course at the end of this month. But just a couple quick thoughts. First in terms of the kind of what's going on the bigger picture why I think that we'll get good news later this month. I think those capex numbers are going to be probably plus 40%. Investors are making a fundamental mistake when they think about this AI infrastructure buildout. The conversation is wrapped around the idea of infrastructure for training and the reality is that the inference market, Jensen talks about this but we have an affiliate company Intelligent Alpha which uses a lot of these models. We see how long these models are thinking. That inference market last year in 2025 was five times as big as the training market. Over time this could be hundreds, thousands, hundreds of thousands of times bigger. So this party is going to continue longer. As far as kind of the small versus large cap piece, I made a prediction earlier, stand by it, this back in December that small caps are going to outperform. We have an ETF LOUP which focuses on those small caps. You saw it this week, AMD up 14% on that TSMC. Why is that? Just because the gains have kind of run their course for the big guys.
That's one piece to it. But if you just look at, if you're a believer, ultimately it comes down to do you believe that this infrastructure piece that comes back to that inference. If you believe that that's the case, just mathematically these smaller companies should have higher greater earnings revisions. And so still a big believer. I think Apple's going to be a wonderful performer in the first half of the year, Google for the year. But I think this small cap trade, it happened last year. I think it's going to continue throughout this year.
