On Wednesday, July 4th, Wall Street analysts unanimously expressed that after a turbulent period in Tesla's stock price and Elon Musk's legal disputes causing many difficulties, this electric car manufacturer may finally be ready to make a comeback.
Investors have been focusing on the rebound potential of Tesla's stock price for over a year. Tesla's sales have declined 15% in the past 12 months. Tesla's delivery volume declined for the second consecutive quarter but was stronger than analysts' expectations, reaching 443,956 vehicles compared to the expected 436,000 vehicles.
These data may indicate a better future for this auto manufacturer, particularly when Musk ends the 'soap opera' surrounding his compensation plan and investors focus on the upcoming development of artificial intelligence.
"Is Tesla back on track?" Morgan Stanley strategists said in a report on Tuesday. "Just more than two weeks ago, our clients were preparing for negative news that could result in management and strategic changes after shareholders rejected Elon Musk's 2018 compensation plan. Fast forward to today and clients are asking us about positive catalysis of 2Q and beyond."
Tesla also reduced inventory in the second quarter and increased its energy storage to the highest level in history. The strategist said that higher energy storage is an 'eye-catching' update because it indicates that Tesla may benefit from the growing demand for energy brought about by the AI boom.
"As AI accelerates the multi-generation growth of energy demand, power generation and data center investment, we believe investors will begin to pay more attention to Tesla Energy. We value Tesla Energy at $1,300 billion or $36 per share because it has unique advantages and can benefit from US grid investment accelerated by the AI boom."
Morgan Stanley reiterated its 'buy' rating on Tesla's stock with a target price of $310, meaning there's still 30% upside potential.
"After the annual shareholder meeting in mid-June, the stock continued to gain momentum," said Garrett Nelson, senior equity strategist at CFRA Research. "We think Musk has successfully refocused investor attention on long-term opportunities in AI, robotics, energy storage, and other businesses, shifting the focus from short-term challenges."
Nelson added that Wall Street is focused on Tesla's Robotaxi, Musk's months-long campaign for a fully automated driving service, and it could be a huge growth driver in the future.
CFRA maintains its 'buy' rating on the stock and raises its target price to $250 per share, implying just 1% upside.
After better-than-expected delivery data, other strategists are more bullish.
"I think over the next several years, this company's stock will double or triple or more. And we're still in the early innings," Keith Fitz-Gerald, founder of the Fitz-Gerald Group, told CNBC on Tuesday, adding, "This is about power. This is about robotics. I think this may be the most underestimated AI game on the planet right now. Love him or hate him, Musk knows what he's doing."
Dan Ives, an analyst at Wedbush Securities, previously said Tesla's stock price could surge in the second half of this year as the debut of Robotaxi represents a turning point for the company.
Wedbush reiterated its 'outperform' rating on Tesla and raised its target price to $300 per share. Ives said in the most optimistic scenario, Tesla's stock price could rise to $400 by the end of the year, meaning it has 63% upside potential from its current level.
"Tesla's stock price relies on Wall Street realizing that, in our opinion, Tesla is the most underestimated AI company in the market," said Evers in a report. He added, "In short, the worst is behind for Tesla because we believe the demand story for electric vehicles is beginning to break through as a disruptive technology ahead of the historic Robotaxi Day on August 8th."
After the release of Tesla's delivery volume on Tuesday, the stock price skyrocketed 10%, and rose 6% on Wednesday, trading at around $246. The stock has almost reversed all the losses from 2024 and has fallen less than 2% so far this year.