Dan Ives, Wedbush Securities, joins 'The Exchange' to discuss why 2026 will be a great year for Tesla, what to anticipate in earnings and much more.

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

Rise of AI

Dan Ives, Wedbush Global Head of Technology Research, identified Nvidia and Tesla as leaders in the field of 'physical AI', emphasizing Tesla's strong potential due to its advancements in autonomous vehicles, robotics, and full self-driving technology. Ives forecasts that Tesla's market capitalization could reach $3 trillion by late 2026 or early 2027, driven by increased adoption of autonomous features and the company's expanding role in the AI ecosystem.

Ives also discussed the broader Musk ecosystem, including the potential public offering of SpaceX and the anticipated regulatory shift toward federal oversight of autonomous vehicles. He expects Tesla to capture a significant share of the global autonomous market, with full self-driving penetration potentially reaching 50%, which could substantially boost the company's margins and growth.

Nvidia, Tesla best companies in 'physical AI', says Wedbush's Dan Ives

There's also a chance, he says, that it could hit a $3 trillion market cap by the end of that year. For more, let's bring him in. He's here on set with me, Dan Ives, is Wedbush Global Head of Technology Research. Welcome. Great to be here. You could have picked an easier one, maybe NVIDIA. Why Tesla to you? Is it still so clear for all the ups and downs, for the auto industry, for all of its ambitions, everything they want to do is always delayed. Granted, the market cap is still phenomenal. Why do you feel so strongly that 2026 will be a great year? I think it's about autonomous. When it comes to physical AI, I think there's nothing better when it comes to physical AI than NVIDIA and Tesla. I think this is going to be a golden chapter for Tesla. Physical AI. When it comes to robo taxis, when it comes to cyber cabs, volume production, true autonomous, and of course, you look at robotics in terms of optimists. Kelly, that's why I think we're looking at two trillion, ultimately, probably a $3 trillion market cap by late 2026 or early 2027. That's why it continues to be one of our top picks. What's the E? Think about a market cap that big. You say, okay, it's high multiple. I don't know what exactly the earnings look like. What are you anticipating on that front? How does physical AI kind of feed directly into the earnings power it might have? I mean, when I look out in the next three, four years, I think earnings power is 4X, 5X. Because it's my view that when you think about not just the FSD piece, but in terms of true autonomous, it's going to change the whole margin profile. It changes the whole growth story. I think just going forward for Tesla, the focus, it's, okay, delivery, do they matter? Of course, they matter. But in terms of the next few years, especially Musk now, wartime CEO in terms of pay package, as that's already cemented, this is just the start. They're also going to have an ownership XAI. Look what's happened in SpaceX. I mean, I think we're now talking about this next AI chapter that's happened across the Musk ecosystem. We had Dan Premek on last week and he said, the question to ask is, why is SpaceX going public now? Do you think there's anything related to financial pressure on Tesla or Musk or anything like that? Or is it a political, why would 2026 be the year for SpaceX? I think the time's right. I mean, you could argue valuation, right? Does it approach a trillion dollars? It's the same reason why it is, you know, anthropic or, you know, ultimately when you look at open AI and others, I mean, we're hitting at a point where it's only year three of an eight to 10 year build out in terms of the AI revolution. And for the first time in 30 years, I mean, you've talked about this, you know, US is ahead of China when it comes to tech, but SpaceX is an inflection point. I think it's important that it goes public. It's the right time. And look, we are in, I think, two more years in this tech bull market and we're going to see more and more of these great private companies going public. Won't SpaceX be, if you'll pardon the term, sexier than Tesla? In other words, right now, if you are a big fan of Elon Musk and everything he's doing and the future as described, this is the only public equity you can own for that story. Now, SpaceX could be the newer, younger thing on the block. What if investors go with that and thus remove some of the halo, the community effect around those who hold shares of Tesla and support its valuation just to have a piece of Musk? Yeah, it's a great point. Look, I actually think it expands. I mean, to some extent, the ecosystem from SpaceX to Tesla and ultimately what's going to be the ownership of XAI, because the reality is when you think about what's happening here, I mean, we're talking about the next five, 10, 15 years, Musk at the centerpiece of it. But I think it speaks to when it comes to Tesla, that continues to be the best play because I think autonomous is worth a trillion dollars alone. You think about Optimus in terms of true robotics. And as this all plays out, I think globally, I mean, they can own 70, 80 percent of the autonomous market globally over the coming years. I know you think that full self-driving penetration could be as high as 50 percent. In other words, half the people who buy a Tesla pay the extra money to have that option, which would be, as you say, a game changer for margins and for the stock. So that's part of what you're talking about, is for those who own Teslas, they use this technology. The other part is the cyber cab, what's it called? And how would you describe its position in this vis-a-vis Waymo, where Waymo also does quite well, the car's really expensive, regulatory and otherwise, what should we expect on the cyber cab front from Tesla? Well, first, like FSD, you're going to go from penetration 15 percent to 50, and I think it could even be higher. So from a margin perspective, that's going to be huge. Look, Waymo, Waymo is going to be a rounding error relative to what Tesla is going to do, I think, not just in the U.S., but I think globally. Look, it speaks to just how expensive those cars are, how they could scale. And I think when you think about Autonomous and in terms of the roadmap, I mean, we would expect probably some sort of executive order going into early next year, where I think it's going to clear in terms of the federal roadmap. I mean, more and more, you're going to go away from the states to federal, and that's going to be extremely important for Tesla in terms of where I think they could take RoboTax.

Four people have been arrested in California - charged with plotting a series of bombing attacks on multiple targets on New Year's Eve.

California

FBI arrests four over alleged New Year’s Eve bomb plot in California

Police in Rhode Island are searching for a new person of interest following Saturday’s deadly shooting at Brown University. Investigators say the case remains active as authorities work to determine a motive.

Providence

New person of interest sought in Brown University shooting

The son of filmmaker Rob Reiner was arrested on homicide charges after the director of beloved movies like "When Harry Met Sally ..." and his wife were found dead in their Los Angeles home, a police official said on Monday.

Los Angeles

Rob Reiner's son arrested after director and wife found dead

A jury found Brian Walshe guilty of first-degree murder in the death of his wife Ana on New Year's Day in 2023 in their Massachusetts home. Legal analyst Jennifer Roman joins with more details.

Boston

Brian Walshe found guilty of first-degree murder in wife's death

Hong Kong's High Court on Monday (December 15) found pro-democracy campaigner Jimmy Lai guilty of conspiracy to collude with foreign forces and to publish seditious material under a China-imposed national security law that could see him jailed for life.

Hong Kong Island

Hong Kong court finds Jimmy Lai guilty in landmark security trial

Ukrainian President Volodymyr Zelenskyy and U.S. negotiators are meeting in Berlin. As the U.S. grows increasingly pressed to end the four-year war, the peace negotiations continue, with territorial concessions to Russia remaining the "sticking point" for Ukraine.

Berlin

Ukraine Invasion

Zelenskyy offers to drop NATO bid for security guarantees

Police have released a person of interest who was detained in a shooting at Brown University. Two students were killed and at least nine others were injured in the Saturday attack. Tom Hanson spoke with students about the shooting.

Police release person of interest in shooting at Brown University

Ukraine’s President Volodymyr Zelenskiy proposed abandoning NATO ambitions in exchange for Western security guarantees during peace talks in Berlin. The move marks a major shift as Kyiv seeks to end the war with Russia without ceding territory.

Ukraine offers to drop NATO bid at Berlin peace talks

Rob Reiner and his wife, Michele, were found dead Sunday in their Los Angeles home, sources told CBS News, in what police called an apparent homicide. Rob Reiner was 78 and Michele Reiner was 68.

Brentwood

Director Rob Reiner and his wife found dead in their L.A. home

Far-right candidate Jose Antonio Kast wins Chile's presidential run-off, after defeating his leftist opponent.

Santiago

Far-right candidate Jose Antonio Kast wins Chile’s presidential election

The person of interest authorities took into custody in connection with the shooting at Brown University has been identified as Benjamin Erickson. He's a 24 year old, originally from Wisconsin.

Person of interest identified in Brown University shooting

Two alleged gunmen who killed 15 people at a Jewish celebration in Sydney's Bondi Beach were a father and son, police said on Monday, as Australia mourned victims of its worst gun violence in almost 30 years. This video contains graphic images.

Bondi Beach

Father and son behind Bondi mass shooting, Australian police say

Israel has described a deadly mass shooting at Sydney’s Bondi Beach as an attack on Jews, after gunmen opened fire during a Jewish holiday event, killing at least 11 people.

Council of the City of Sydney

Israel calls Bondi shooting attack on Jews, urges action on antisemitism

Two gunmen attacked a Hannukah celebration on a Sydney beach Sunday, killing at least 11 people in what Australian Prime Minister Anthony Albanese called an act of antisemitism and terrorism.

Gunmen kill several at Jewish gathering in Sydney's Bondi Beach

Providence police have detained a "person of interest" in connection with the Brown University shooting that left two students dead and another nine people wounded, as the Ivy League school said it had lifted a shelter-in-place order for its campus in Rhode Island.

Police hold person of interest after Brown University shooting

Belarus has freed more than 120 political prisoners in a major thaw in relations with the United States. The releases came in return for Washington lifting sanctions on potash, a key source of revenue for Belarus.

Minsk

Belarus releases 123 prisoners as U.S. lifts sanctions

Washington was still under a state of emergency on Saturday after torrential rains swamped communities. Plus, snow and dangerous cold are falling on some in the Midwest and on the East Coast. Nicole Valdes has more from Washington state.

Deming

Washington under state emergency as rains ease

China's plans for a massive new embassy in the British capital were delayed until January. Construction plans have proven controversial, with some raising espionage concerns. Ramy Inocencio has more from London.

London

Controversial Chinese embassy construction in London delayed

A United Airlines jetliner lost one of its engines during liftoff from Washington's Dulles Airport bound for Tokyo.

Tokyo

United Airlines flight loses engine during liftoff, sparks brush fire

Thailand says there is no ceasefire with Cambodia, and its military will continue fighting until it faces no further threat. That's despite the US president's earlier announcement that both sides had agreed to stop their attacks. Villages along the border are largely empty, except for a handful of volunteer security guards.

Phnom Penh

Fighting continues along Thai-Cambodia border

U.S President Donald Trump has threatened potential land strikes on Venezuela to target an illegal narcotics trade. Trump says the drugs are arriving on U.S shores and that President Nicolas Maduro is behind it. Maduro has denied the claim.

Caracas

Washington considers Venezuela land assault

King Charles III, who shared his cancer diagnosis with the world in February 2024, announced Friday that he would be scaling back his treatment after his doctors have seen success. The monarch also pushed for people to get early screenings, saying, "Early diagnosis quite simply saves lives."

King Charles to reduce cancer treatments

Belarus has freed more than 100 political prisoners, including a Nobel Peace Prize winner, in exchange for sanction relief on Belarusian potash, a U.S. statement said on Saturday.

Belarus releases political prisoners as U.S. lifts some sanctions

Ukrainian President Volodymyr Zelensky said he visited troops fending off Russian advances near the embattled city of Kupiansk that Moscow claimed to have captured last month, which Kyiv denies.

Kup'yans'k

Zelenskyy visits troops as Ukraine claims gained ground near key city

In an audacious move, the EU has decided to indefinitely immobilize the Russian sovereign assets, pushing back against external pressure to release the funds before Moscow agrees to pay war reparations to Ukraine.

Brussels

EU locking in Russian assets for good

U.S. House Democrats released new images from the estate of the late convicted sex offender Jeffrey Epstein that feature U.S. President Donald Trump and other high-profile people previously linked to Epstein.

Washington

House Democrats release more Epstein estate photos

For the first time, Amnesty International has accused Hamas and its allies of committing crimes against humanity, following an investigation into the 7 October 2023 attacks on Israel. The organization found that 1,221 people were killed and said the mass killing of civilians amounted to extermination.

Jerusalem

Middle East Conflict

Amnesty accuses Hamas of 'crimes against humanity' for Oct. 7 attack

The “Architects of AI” were named Time's person of the year Thursday, with the magazine citing 2025 as when the potential of artificial intelligence “roared into view” with no turning back.

Time magazine names 'Architects of AI' as person of the year for 2025

Message board website Reddit filed a lawsuit on Friday (December 12) asking Australia's High Court to overturn the country's social media ban for people under 16 as well as its inclusion in it, calling the law an infringement of free political expression.

Reddit sues to overturn Australian social media ban

As tensions rise with Venezuela, U.S. President Donald Trump said land operations could start "pretty soon." Sources tell CBS News the administration is also planning more tanker seizures.

Nvidia, Tesla best companies in 'physical AI', says Wedbush's Dan Ives

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Rise of AI