FX168 Financial News Agency (North America) reported that after a difficult start to the year led to a decline in Tesla Stocks, the stock price in the fourth quarter has surpassed several others in the Magnificent 7.

In recent months, Tesla has been doing a lot, and since the "Robotaxi" event in October, the stock is approaching all-time highs, having risen by 68%.

Meanwhile, the next best-performing stock among the "Magnificent 7" is Amazon, which has risen by about 21%, followed by Alphabet, which is up 14%. Tesla's earnings easily outperformed the NASDAQ 100 Index, which rose by about 6%.

(Image source: Business Insider)

The significant performance of this electric vehicle manufacturer’s stock reflects the change in wealth for Tesla and Musk as the company's prospects have improved over several quarters, especially as Musk has deepened ties with the elected president, Donald Trump.

Stocks may have sufficient room for more upside.

"There are 5 companies with a Market Cap exceeding $2 trillion—Apple, Amazon, Google, Microsoft, and NVIDIA—I think Tesla, with a Market Cap over $1.3 trillion, can be said to be one of the most innovative companies. In other words, I believe Tesla's Market Cap has plenty of room for growth," Gene Munster of DeepWater Management said on X on Tuesday.

Tesla investors have long embraced Musk's grand ambitions for a robotaxi network, and Musk's massive political gamble on President Donald Trump seems to be paying off. Meanwhile, the company's auto competition appears to be slightly less threatening than it was earlier this year.

Everything is going smoothly for Tesla as 2024 comes to an end.

(1) Musk and Trump

Musk placed a bet on Donald Trump through large political donations and vocal support online and on the campaign trail. His efforts quickly bore fruit.

Trump appointed Musk as co-head of the newly formed government efficiency department, and Musk has been spotted with Trump on multiple occasions.

The market has been debating how beneficial this relationship is for Musk and Tesla, but an increasing number of investors believe this is simply bullish.

Yardeni Research noted in a statement on Tuesday regarding the recent surge in the stock that much of the recent boom is attributed to the brotherhood between Musk and President Trump.

Musk's relationship with President-elect Trump appears to be extraordinary, which could ultimately translate into policies favorable to Musk's business.

Reports have indicated that after Trump won the election, the rules for autonomous vehicles may be relaxed during his second term, paving the way for the sale of vehicles without steering wheels or pedals, similar to the Robotaxi introduced by Tesla in October.

Shortly after the election, Wedbush Strategies Analyst Dan Ives raised the Target Price for the stock, describing Trump's victory as a game changer, particularly because it relates to the easing of regulations that can quickly realize autonomous driving ambitions.

Not long after the election, it was reported that Trump's transition team would like to terminate the electric vehicle tax credits. While this would affect Tesla, the company is said to be in favor of ending the incentives, believing that doing so would harm competitors like Rivian and Lucid more.

(2) Restore Sales Growth

It has proven that 2024 will be a tough year for Tesla's sales growth, with the company expected to deliver as many Autos this year as in 2023.

The sales growth of a company that previously expected an annual car sales growth rate of about 50% suddenly halted, putting pressure on Stocks in the first half of this year. However, Musk's recent forecasts indicate that the company's sales should rebound significantly in 2025.

In Tesla's third quarter Earnings Reports conference call, Musk predicted that the company's vehicle sales would grow by 30%.

If Tesla can achieve this goal, it will deliver up to 2.3 million vehicles next year. Such a sharp growth return could excite investors again and support the company's premium valuation.

(3) The tariffs proposed by Trump may benefit Tesla.

Although the market is concerned that a trade war under Trump’s leadership could harm the broader stock market, investors believe tariffs could help Tesla surpass its foreign competitors.

Most of Tesla's manufacturing occurs in the USA, meaning tariffs on imports can ultimately benefit Tesla's auto sales in the USA by targeting foreign electric vehicles, especially those from China.

If tariffs are imposed, these cars will be more expensive for American buyers compared to Tesla vehicles, giving Elon Musk's company an advantage.

Yardeni Research states that tariffs by the USA and EU on Chinese electric vehicle exports are a tangible outcome that should support the company’s growth expectations.

(4) General Motors exits the robot taxi business.

General Motors announced on Tuesday that it will scale back its ambitions for a robot taxi network through its self-driving Cruise subsidiary.

General Motors CEO Mary Barra previously envisioned that the robot taxi division would generate $50 billion in revenue for the company by 2030.

On the contrary, General Motors will not integrate cruise autonomous driving technology into future vehicles and has abandoned plans to launch a fully autonomous robot taxi network.

According to Gene Munster of Deepwater, this is a victory for Tesla.

This further proves that the robot taxi market will have the most winners. Munster said on X, "The possible winners are Tesla and Waymo."

This is important because Tesla's premium valuation largely depends on its ambitions in the robot field. Therefore, any progress Tesla makes in this area, especially relative to its competitors, could help solidify its premium valuation.

Goldman Sachs mentioned Tesla in a statement on Tuesday, stating that given the broader market interest in potential AI beneficiaries, we also believe that the stock may maintain a higher multiple to reflect the long-term opportunities associated with FSD/robotics.