From Nasdaq, Inc.:

Tesla is being debated as an electric carmaker with AI ambitions or a genuine AI company that also makes electric vehicles. Morgan Stanley analyst Adam Jonas believes Tesla fits into the latter category, adding a bull-case price target of $500 per share, implying 170% upside from its current price. Tesla struggled economically in 2023, and 2024 doesn’t appear better. The company reported disappointing financial results for Q4, missing expectations on the top and bottom lines, with total revenue increasing just 3% to $25.2 billion as high interest rates suppressed demand for electric vehicles. This came after Tesla delivered 1.81 million vehicles last year, up 38%, and produced 1.85 million vehicles, up 35%. The combination of disappointing fourth-quarter results and worries about CEO Elon Musk’s behavior have caused Tesla shares to decline 26% year-to-date. However, the long-term investment thesis remains intact, and the recent drawdown creates a buying opportunity for Tesla bulls. Tesla’s entry into the burgeoning autonomous vehicle market and its growing position in AI has boosted optimism about the company’s profit potential. With a strong position in AI and a new vehicle planned for late 2025, Tesla’s competitive edge in the electric vehicle and AI market is expected to continue. Morgan Stanley analyst Adam Jonas believes that products like FSD software, robotaxi services, paid charging, insurance, and AI cloud services through Dojo will put Tesla in front of a $10 trillion addressable market by 2030 and that his $500 per share price target for Tesla will be derived from these products. However, investors should be cautious in investing in Tesla stock, given that a sizable portion of the bull thesis is built on products that are partially or entirely theoretical, with the Wall Street consensus expecting Tesla to grow sales at 18% annually over the next five years. The bull case may be promising in the long run, but expectations should be tempered for now.



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