Tesla shares rose in early trading on Tuesday, extending their 2025 advance beyond 15%, following a key price target upgrade from a top Wall Street analyst ahead of the group's fourth-quarter earnings in late next week.
tesla (TSLA) remains one of the market's biggest post-election winners, adding more than $560 billion in value since the close of trading on Nov. 4, as investors continue to bet that Elon Musk's close ties to President Donald Trump and His key advisory role to the new government administration will benefit both the automaker and its countless portfolio of businesses and investments.
Analysts are also betting on higher profits driven by Musk's broader ambitions in artificial intelligence, autonomous driving software and robotics, each of which could benefit from looser regulations under the Trump administration.
That could partly offset the impact of shrinking profit margins and slowing demand on its long-standing electric vehicle business, which posted its first annual decline in sales despite strong profits in China and cutbacks. prices in the main markets of the world.
Piper Sandler analyst Alexander Potter, who added $185 to his Tesla price target, taking it to $500 per share in a note published Tuesday, said investors are now “more willing to entertain bullish scenarios” based on in the potential of the “real-world artificial intelligence” group.
ai's profit potential is 'compelling'
Potter maintains that while Tesla's near-term prospects are “highly uncertain,” given the decline in demand for electric vehicles and questions related to the launch of a lower-priced unit later this year, the change in focus of the group towards ai-driven profits remains compelling.
Tesla is likely to deliver about 1.96 million vehicles this year, Potter estimates, an 11.4% advance from 2024 levels, with “>100,000 incremental units coming from unknown vehicles and another 70,000 incremental units from “Cybertruck”.
Musk, however, continues to emphasize that Tesla's long-term prospects are more aligned with its ambitions for artificial intelligence, cyber taxi, energy storage and robotics technologies than with traditional car manufacturing.
Related: Top analyst reviews Tesla stock price and rating with Q4 earnings on the line
Musk says the group will produce up to 2 million autonomous Cybercabs a year by 2026 and insists that “vehicle growth of 20% to 30% is likely next year”, absent “some force majeure events, such as the outbreak of a great war or interests”. Rates skyrocket or something.”
“Once Tesla meets its current launch plan, management's focus will shift away from launching new cars and toward popularizing self-driving software,” Potter said.
“To reflect this, we are now modeling a contribution from full self-driving licenses and value Tesla's existing businesses at just under $300 per share, including full self-driving.”
Tesla choppy trading in early 2025
Potter says shares are likely to be “choppy” through the first half of the year as EV market uncertainties weigh on sentiment, but remains convinced Tesla is a top “buy and hold idea” by 2025.
Tesla is scheduled to release detailed fourth-quarter earnings after the close of business on Jan. 29, with analysts expecting a bottom line of 72 cents per share on revenue of $27.23 billion.
Related: Analysts Offer New Car Insights After CES, Cast Doubt on Tesla
Meanwhile, gross profit margins are expected to expand modestly to 18.85%, according to LSEG data.
Tesla shares rose 1.9% in premarket trading, indicating an opening price of $434.65 each.
Related: Veteran Fund Manager Issues Dire S&P 500 Warning for 2025
