Warning that Tesla (TSLA) did not provide "a single positive fundamental data point" in conjunction with its first-quarter earnings report, Lou Basenese told Fox Business recently that investors should not "believe the hype of Tesla."

A former Senior Investment Consultant and Analyst for Morgan Stanley, Basenese is currently Executive VP, Market Strategy for Prairie Operating Company.

Reasons To Be Skeptical of TSLA

"This is a car company that is struggling on all metrics we can evaluate on a fundamental basis," said Basenese. He noted that Tesla's Q1 revenue had dropped 9% year-over-year even though global EV deliveries had jumped 29% YOY last quarter.

The investment professional added that he was somewhat pessimistic about the company's ability to generate a great deal of revenue from products other than EVs, since it had not been able to do so until now.

"I need to see (that Tesla) is getting traction from new products" before recommending the stock, the market strategist explained.

Tesla's Other Problems

There are publicly traded companies with lower valuations and faster growth than Tesla, Basenese said. He added that EVs are no longer supported by the government, while Tesla still needs to show that it can execute at the level which Elon Musk has promised.

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.