Wall Street: Tesla is currently the lowest valued AI stock in the world!
Tesla's stock experienced a difficult period in the first half of 2024, but Wall Street is anticipating a turnaround. Tesla's delivery volume in the second quarter declined, but it was not as bad as analysts had expected. Now, as the next phase of growth begins, all eyes are on Tesla's autonomous driving taxi and artificial intelligence projects
After a period of turbulence in Tesla stock and various dramatic events involving Elon Musk's legal disputes, Wall Street analysts unanimously believe that the electric car manufacturer may finally be ready for a comeback.
Over the past year, investors have been watching for a potential rebound in Tesla's stock, as the company's sales have declined by 15% in the past 12 months. Despite two consecutive quarters of declining deliveries, Tesla's deliveries in the second quarter still outperformed analysts' expectations, reaching 443,956 vehicles compared to the expected 436,000 vehicles.
These data may indicate that Tesla is about to enter better days, especially as investors shift their focus to the latest developments in the field of artificial intelligence (AI) following the conclusion of the "soap opera" surrounding Musk's compensation plan.
"Is Tesla back on track?" Morgan Stanley's strategists stated in a report on Tuesday, "Just over two weeks ago, our clients were preparing for the possibility of shareholders vetoing Elon Musk's 2018 compensation plan, which could lead to management and strategic changes, exacerbating months of negative news. Fast forward to today, clients are asking us about positive catalysts for the second quarter performance and beyond."
Tesla also reduced its inventory in the second quarter and raised its energy storage to a historic high. Strategists say that the higher energy storage is a "standout" update, as it indicates that Tesla may benefit from increased energy demand brought about by the AI boom.
"As generative AI accelerates multi-generational growth in energy demand, power production, and data center investment, we believe investors will start paying more attention to Tesla Energy, which we value at $36 per Tesla share ($130 billion), as this business holds a unique position in benefiting from accelerated U.S. grid investments driven by the AI boom," they said.
Morgan Stanley reiterated its "overweight" rating on Tesla stock with a target price of $310, implying a 30% upside potential.
"After Tesla's annual meeting in mid-June, the stock continued to ride the wave of positive momentum," said Garrett Nelson, Senior Equity Strategist at CFRA Research, adding, "We believe Musk has successfully shifted investors' focus to long-term opportunities in artificial intelligence, robotics, energy storage, and other business lines, avoiding recent challenges."
Nelson added that Wall Street is keeping an eye on Tesla's Robotaxi autonomous driving service, which Musk has hinted at for months, stating that this could be a "huge driver of future growth."
Nelson added that Wall Street is keeping an eye on Tesla's Robotaxi autonomous driving service, which Musk has hinted at for months, stating that this could be a "huge driver of future growth." CFRA maintains a "buy" rating on Tesla stock and raises the target price to $250 per share, implying only a 1% upside.
Other strategists have made more optimistic forecasts after delivering better-than-expected data.
"I think this stock will double or even triple in the next few years, and even more. And we are still in the early stages," said Keith Fitz-Gerald, head of Keith Fitz-Gerald Research, on Tuesday to CNBC, adding, "This is not just about electricity, it's about robotics. I think it may be the most underestimated AI stock globally right now. And love him or hate him, Musk knows what he's doing."
Dan Ives, an analyst at Wedbush Securities, previously stated that with the launch of autonomous taxis, Tesla may see a significant rebound in the second half of the year, which will be a turning point for the company.
Wedbush reiterated its "outperform" rating on Tesla and raised the target price to $300 per share. Ives stated that in the most optimistic scenario, Tesla's stock price could rise to $400 by the end of the year, implying a 63% upside from current levels.
"For Tesla stock, the key is Wall Street recognizing that Tesla is the most underestimated AI investment opportunity in the market," Ives said in a report, adding, "In short, we believe the worst is behind us as the electric vehicle demand story is coming back, and ahead of the historic Robotaxi Day on August 8, this disruptive tech giant will see new developments."
Following the report delivery, Tesla's stock surged as much as 10% on Tuesday and continued to rise by 6% on Wednesday, trading at around $246. Tesla's stock has nearly reversed all losses from 2024, with a decrease of less than 2% year-to-date.
Source: Alpha Factory