- Tesla stock had a tough first half of 2024 but Wall Street is eyeing a turnaround.
- Second-quarter deliveries were down but not as bad as analysts had expected.
- Now, all eyes are on its Robotaxi and AI initiatives as the next leg of growth commences.
After a rocky stretch for Tesla stock and a lot of drama surrounding Elon Musk's legal battles, the electric vehicle maker could finally be poised for a comeback, according to a chorus of Wall Street analysts.
Investors have been eyeing a potential rebound in the stock for more than a year, with Tesla sales having slid 15% over the last twelve months. Tesla deliveries slumped for the second quarter in a row, but they were stronger than analysts had expected, with clocking in at 443,956, compared to estimates of 436,000.
Those figures could be a sign better days are ahead for the carmaker, especially as Musk puts the "soap opera" surrounding his pay package to bed and investors eye new artificial intelligence developments on the horizon.
"Tesla getting its mojo back?" Morgan Stanley strategists said in a note on Tuesday. "Little more than 2 weeks ago our clients were preparing for shareholders to reject Elon Musk's 2018 comp package potentially setting up a change of management and strategy, compounding many months of negative newsflow. Fast forward to today, clients are beginning to ask us about positive catalysts into 2Q results and beyond."
Tesla also reduced its inventory over the second quarter and boosted its energy storage to an all-time high. Higher energy storage in particular was a "show stealer" update, strategists said, as it suggests Tesla could benefit from increased energy demand stemming from the AI boom.
"As Gen AI acceleration spurs a multigenerational increase in energy demand, electricity generation, and data center investment, we believe investors will begin to pay more attention to Tesla Energy which we value at $36 per Tesla share ($130bn) as the business
uniquely positioned to benefit from investment in the US electric grid accelerated by the AI boom."
Morgan Stanley reiterated its "overweight" rating on Tesla stock with a price target of $310, implying another 30% upside.
"The stock continues to ride a wave of positive momentum following its annual meeting in mid-June, according to Garrett Nelson, a senior stock strategist at CFRA Research. "We think Musk successfully shifted investor focus to long-term opportunities in AI, robotics, energy storage, and other business lines, diverting attention away from near-term challenges."
Wall Street is focused are on Tesla's Robotaxi, Nelson added, the full self-driving service Musk has teased for months. The company has been hard at work on an autonomous car, which Musk himself has said could be a "massive driver" of the company's future growth.
CFRA maintained its "buy" rating on the stock and raised its price target to $250 a share, implying just 1% upside.
Other strategists had even more bullish calls following the better-than-expected deliveries figure.
"I think the stock is going to double or triple, maybe even more, over the next few years. Again, we're early innings," Keith Fitz-Gerald, the principal of Keith Fitz-Gerald Research, said to CNBC on Tuesday. "This is about power, this about robotics, this is perhaps the best under-valued AI on the planet right now. And love him or hate him, Musk knows what's he's doing."
Tesla could see a sharp rally in the second half of the year, as the Robotaxi's debut represents the turning point for the company, Wedbush Securities analyst Dan Ives previously said.
Wedbush reiterated its "outperform" rating on Tesla and raised its price target to $300 a share. In the most bullish scenario, Tesla stock could rally to $400 by the end of the year, Ives said, implying 63% upside from current levels.
"The key for Tesla stock is the Street recognizing that Tesla is the most undervalued AI play in the market in our view," Ives said in a note. "In a nutshell, the worst is in the rear-view mirror for Tesla as we believe the EV demand story is starting to return to the disruptive tech stalwart ahead of a historical Robotaxi Day on August 8th," he later added.
Tesla shares surged as much as 10% on Tuesday after it reported deliveries, and pushed 6% higher on Wednesday to trade around $246. The stock has reversed nearly all of the losses it's seen in 2024, with shares now down less than 2% year-to-date.
