Tesla’s (NASDAQ: TSLA) stock price has received a 14% upside revision based on the company’s anticipated Optimus robot capabilities.
By press time, Tesla was trading at $356, ending the last trading session up 1.8%. The equity has surged 44% so far in 2024.
Most of the year-to-date gains are attributed to the post-election rally, fueled by CEO Elon Musk’s close ties to President-elect Donald Trump, but the stock has faced rejection at $400.
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Analyst predicts Tesla to target $400
The latest price target could be achievable, according to an investor note on December 5 by BofA Securities’ John Murphy. Murphy raised Tesla’s price target to $400 from $350 while maintaining a ‘Buy’ rating on the stock.
The revision reflects optimism around Tesla’s expanding robotics, particularly the Optimus humanoid robot program.
Murphy noted that Optimus is already operational within Tesla’s facilities, where it sorts 4680 battery cells autonomously. The robot is also undergoing various tests to refine its design and expand its capabilities.
The analyst emphasized that increasing the number of deployed robots will accelerate Optimus’s training and development.
Although the program currently consumes a small fraction of Tesla’s computing capacity, its importance is expected to grow, especially as the Texas-based firm advances its robotaxi technology.
“This increased focus will drive an acceleration in Optimus’s capabilities and ultimately lead to increased production in 2026 and beyond, thereby helping to drive costs down,” Murphy said.
He also suggested that Tesla might raise additional capital to fund expanded computing capacity, particularly for Optimus, as part of the electric vehicle manufacturer’s artificial intelligence (AI) venture.
Considering Tesla’s market position, if the company nails the Optimus robot, it will be in a pole position to capture the market, which Citigroup analysts Rob Garlick and Wenyan Fei project will reach $7 trillion by 2050, driven by advancements in AI. They highlight significant potential in-home services, logistics, construction, and food delivery sectors.
Mixed outlook on Tesla’s AI potential
While BofA Securities views Optimus as a trigger for Tesla’s stock growth, Joseph Spak from UBS has expressed skepticism regarding the company’s AI capabilities. As reported by Finbold, Spak noted that robotics and robotaxis are overly speculative.
He estimates that Tesla’s auto and energy divisions contribute roughly $52 per share, with the rest driven by AI-related optimism, which he argues inflates the company’s market capitalization by nearly $1 trillion. To this end, the expert increased Tesla’s price target to $226 from $197 but maintained a ‘Sell’ rating.
Other Wall Street analysts further highlight the mixed outlook regarding Tesla’s AI capabilities. In this case, Wedbush’s Dan Ives has termed Tesla the most undervalued AI play, citing full self-driving technology as a potential $1 trillion opportunity for the electric vehicle (EV) giant. Ives, a Tesla bull, sees TSLA stock price doubling in the next 18 months to trade around the $600 mark.
Meanwhile, Morgan Stanley (NYSE: MS) reaffirmed its ‘Buy’ rating, highlighting Tesla’s leading self-driving tech and its ability to capitalize on pro-charging policies in the U.S.
Featured image via Shutterstock
