Why Analysts Are Still Bullish On Tesla Stock Despite Its Tumble From December Highs

Tesla missed on annual vehicle deliveries for the first time ever last year, though analysts are still calling for major upside to the stock.

Apu Gomes/Getty Images; Chelsea Jia Feng

• Tesla's stock price has tumbled sharply from its latest peak but some analysts don't see cause for concern.
• Despite the carmaker's 15% dip from its peak, some still see see double-digit gains for the stock ahead.
• Here's what five analysts had to say about Tesla's outlook in 2025.

Tesla stock has hit a rough patch since peaking in December, but some on Wall Street still see opportunity ahead in 2025.

Shares of the electric carmaker are in the midst of a correction, with the stock down around 18% from its all-time closing high of $479.86 on December 17. The sell-off — originally fueled by broader weakness in the stock market —intensified last week after Tesla missed on annual deliveries for the first time ever.

The stock was down another 4% on Tuesday, trading around $395.30 per share.

But the weakness in the stock in the early days of 2025 hasn't changed the minds of some analysts, who say more upside is ahead this year.

AI could be one bull case for the stock, according to Wedbush Securities analyst Dan Ives, who has predicted companies will spend $2 trillion on AI investment over the next three years.

"Over the last few years we have discussed the AI Revolution non-stop as in our opinion it represents the biggest tech transformation in over 40 years," Ives said. "Now the time has come for the broader software space to get in on the AI Party as we believe the use cases are exploding."

Here's what analysts are saying about Tesla stock's latest stumble and why shares of the carmaker could still see another year of strong gains in 2025.

Buy the dip: Wedbush Securities

Tesla's latest pullback is a sign for investors to scoop up more of the stock, according to Wedbush. That's because Tesla's sales were still "respectable" last year, the firm said, noting that the company delivered around 495,600 vehicles, only slightly below estimates of 504,8000.

Tesla is also expected to push out new models this year, which could give its stock a boost. Analysts pointed to the low-cost Tesla model Musk has been teasing for years.

"We believe Tesla remains the most undervalued AI play in the market today," analysts said, adding that they were "highly confident" Tesla could accelerate its delivery growth by 20%-30%.

"The laser focus for Tesla is the 2025 reaccelerated delivery growth story and FSD penetration with autonomous the grand vision for Musk & Co. Any sell off today on weaker 4Q delivery numbers we are strong buyers."

The firm reiterated its "outperform" rating on the stock and its price target of $515, implying another 31% upside from current levels.

Stock looks cheap: Stifel

Tesla's stock is tempting at current levels, considering that the firm is more than just a car company, Stifel analyst Stephen Gengaro said.

"If you're buying the stock simply because they're selling EVs, the stock is overvalued. When you start thinking about the full self-driving initiatives, start thinking about how that plays into the Cybercab business over time, that's really a huge value driver for the stock in the medium- to long-term," Gengaro said, speaking to Yahoo! Finance on Monday.

Musk's deepening ties to president-elect Trump in recent months even are also bullish. That potentially puts him in a position to influence the regulation of full self-driving technology, Gengaro noted.

Tesla could also benefit if Trump follows through his plan to levy steep tariffs on US imports from other countries. The tariffs could eliminate some competition in the US from Tesla's rivals, another positive, Gengaro added.

"I think he's clearly engaged in the conversation, as far as getting regulation accelerated on the FSD side, and that opens the door for just various growth opportunities for the company over time."

In a note on Monday, the firm raised its price target on Tesla shares to $492, implying 25% upside from current levels.

FSD could be worth nearly half a trillion dollars: BofA

In a note on Tuesday, Bank of America analysts downgraded their rating on Tesla stock to neutral but raised their price target to $490 a share. That represents upside of about 25% from current levels.

They said Tesla's full self-driving technology could be worth around $480 billion. Tesla's robotaxi business, meanwhile, could be valued at around $420 billion in the US and more than $800 billion in markets around the world, the bank estimated.

"We experienced FSD during our field trip to Tesla's gigafactory in Austin, TX in December, and came away impressed by its capabilities," analysts said, predicting that 23 million vehicles could have full self-driving software by the end of the decade. "FSD should have meaningfully higher margins than TSLA's core auto business and could generate billions in EBIT annually."

Tesla also has several positive catalysts lying ahead in 2025, the bank said, pointing to the potential launch of the robotaxi business, and the company possibly ramping up its production of Optimus, its humanoid robot.

The analysts concede that the long-term growth drivers support their price target, though the execution risk is high.

Strength in energy storage: Morgan Stanley

Tesla's slight deliveries miss may not matter much considering newer aspects of its business that will drive future growth, Morgan Stanley said. Analysts pointed to the company's expected lower-priced vehicle model, as well as its energy storage business.

Energy storage deployments surpassed expectations by around 15% over the fourth quarter, while the company's energy storage growth rose around 113% over the 2024 fiscal year, the analysts added.

"In our view, the miss reflects a relatively aged product and increased availability of lower priced competition globally ahead of the hyped introduction of the cheaper new model (Juniper) in early/mid-2025, which more than offset pre-buy and promotional forces," analysts wrote.

The bank reiterated its "overweight" rating on the stock and issued a price target of $400 a share.