Tesla's Post-Election Rally May Resume, Fueled by AI Potential
Tesla's (TSLA) strong post-election rally may soon continue. Since November 5th, the stock has skyrocketed a remarkable 65%. However, it has taken a pause in recent weeks due to concerns over slowing demand and the rollback of pro-EV policies. Tesla shares declined 4% during President Trump's first week in office, contributing to a 12% drop over the past month.
Despite the recent dip, many analysts remain optimistic. They believe Tesla's AI potential is a major growth driver, downplaying the company's first annual sales decline in over a decade. Piper Sandler and Wedbush have raised their 12-month price targets for TSLA this week. Piper Sandler named Tesla its top "buy-and-hold idea," while Wedbush called the new administration a "total game changer" for the company.
Analysts predict Tesla's valuation will reach $2 trillion by the end of the year. They believe this will be driven by a "regulatory friendly" White House that will accelerate the adoption of autonomous vehicles.
AI is seen as the key growth driver for Tesla. Morgan Stanley's Adam Jonas and Nvidia's (NVDA) CEO Jensen Huang have highlighted the importance of AI and robotics for the company. Jonas has not yet priced AI into his value modeling for Tesla, but he believes it is a significant value driver.
The Trump administration's tariff policies are also seen as a potential catalyst for Tesla. Jonas views Trump's tariffs as a push to accelerate the onshoring of AI-enabled technology, creating future growth opportunities for TSLA. He believes Tesla can play a significant role in "filling the void" of next-gen manufacturing and supply chain, driving growth and shareholder value.
Tesla stands apart from traditional automakers in its AI focus. General Motors (GM), Ford (F), and Stellantis (STLA) have faced challenges due to President Trump's threat of tariffs on Mexico and Canada. GM is particularly exposed to these tariffs, with 35% of its US sales coming from Mexico.
Tesla faces its first major test this week with the release of its fourth quarter earnings report. Wall Street analysts will be watching closely to see if the company can meet their lofty expectations under the new administration.