Tesla's AI Potential Buoys Stock Amidst Market Challenges
Tesla (TSLA) stock has experienced a significant surge of 65% since November 5th, but has recently taken a breather due to concerns over slowing demand and changes in pro-EV policies. However, analysts remain optimistic about the company's future, particularly its AI potential.
Piper Sandler and Wedbush have raised their price targets for Tesla, with Piper Sandler labeling it their top "buy-and-hold idea." They believe Tesla's focus on autonomous driving and AI could drive a valuation of $2 trillion by year-end.
Morgan Stanley's Adam Jonas also emphasizes AI as a key growth driver for Tesla. He notes that AI and robotics are becoming increasingly prevalent among investors after Nvidia's CES presentation, which highlighted partnerships with Toyota and Continental in autonomous vehicles.
Jonas sees Tesla as an "embodied AI 'ETF'" due to its strong position in the AI sector. However, he currently does not ascribe value to the company's embodied AI in his price target.
The Trump administration's tariff policies are also viewed as beneficial for Tesla. Jonas believes that tariffs will accelerate the onshoring of AI-enabled technology, creating growth opportunities for the company.
Tesla's AI focus distinguishes it from traditional automakers, who face challenges from Trump's tariff threats. General Motors, Ford, and Stellantis have seen more modest post-election gains or declines due to their exposure to Mexico and Canada production.
Tesla's fourth quarter earnings report, scheduled for release on Wednesday, will be a key event to assess the company's progress amidst changing market conditions.