Tesla (TSLA) "has the best per-unit profit margin in the automotive business, and its business model is still profitable," Brian Mulberry, Zacks Investment Management's Client Portfolio Manager told Schwab Network recently.

What's more, Tesla can monetize its Full Self Driving offering, and its Power unit can offset some of the contraction of its auto business, Mulberry stated.

At this point, the valuation of TSLA stock has dropped enough to make the shares worth buying, Mulberry asserted.

Tesla's Positive Catalysts

Tesla's per-unit margins remain higher than those of any of its competitors, and its earnings are still growing at an 18% to 20% annual clip, Mulberry said.

And although the firm's Power unit, which grew 180% over the past three years, still only generates around 10% of the firm's revenue, the business can offset part of the top-and-bottom-line declines caused by the weakness of TSLA's auto business, according to Mulberry.

Finally, Tesla should be able to license its FSD offering and other services that it provides to other automakers, the stock picker believes.

While we acknowledge the potential of TSLA, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.