Tesla shares bumped higher in early Thursday trading after its disappointing fourth quarter earnings update was somewhat offset by a bullish outlook from CEO Elon Musk, triggering a host of price-target changes from Wall Street analysts.
Tesla shares (TSLA) have added around $530 billion in market value since late October and have been seen as one of the key beneficiaries of President Donald Trump's election in November as the company continues its pivot from its legacy automaking business to a focus on self-driving technologies, energy storage and robotics.
Its core EV business, meanwhile, has suffered from high interest rates and lagging demand, with last year's vehicle deliveries falling for the first time on record and profit margins narrowing because of price cuts and financing incentives.
Tela posted weaker-than-expected fourth quarter revenues of $25.71 billion, about $2 billion shy of Wall Street forecasts, with profits of 73 cents a share that also missed estimates.
Musk, however, was characteristically upbeat in his conference call with investors and analysts following last night's results and reiterated plans to launch a low-cost EV later this year and to put the first fully autonomous Tesla cars on the road by this spring.
Musk predicts 'ridiculously good' growth
"We're setting up for what I think will be an epic 2026 and a ridiculous 2027 and 2028 ... ridiculously good," Musk said.
"Very few people understand the value of self-driving and our ability to monetize the fleet," he added. "Some of these things I've said for quite a long time, and I know people have said, 'Well, Elon, the boy who cried wolf several times.' But I'm telling you, there's a damn wolf this time and you can drive it."
Tesla also said it expected its auto business to return to growth, although Musk did not repeat his earlier estimates of a 20% to 25% gain in deliveries.
Related: Analyst overhauls Tesla stock price target with Q4 earnings in focus
"Despite the miss, and backing off its prior 2025 vehicle sales-growth guidance, [the] shares jumped after hours as we believe the market is focused more on its expectation that Tesla aims to launch unsupervised Full Self-Driving in parts of the U.S. later in 2025," said CFRA analyst Garrett Nelson.
He trimmed his price target by $10 to $540 per share following last night's update. "We reiterate our 'buy' rating, with Tesla as one of the primary beneficiaries of a more accommodating regulatory environment in the U.S.," he added.
Tesla could lead AI's real-world advance
Morgan Stanley's Adam Jonas, who reiterated his 'overweight' rating and $430 price target on Tesla stock, called the earnings report "emblematic of a company in the transition from an automotive 'pure play' to a highly diversified play on AI and robotics."
"As AI moves from the digital world (bits and bytes) to the physical world (atoms and photons), we expect to see Tesla’s total-addressable-market aperture further expand to broader domains, many of which are still not included in buy-side or sell-side financial models for the company," Jonas argued.
"While the journey may be volatile and nonlinear, we believe 2025 will be a year where investors will continue to appreciate and value these existing and nascent industries of embodied AI where we believe Tesla has established a material competitive advantage," he added.
Related: Top analyst reworks Tesla stock price, rating with Q4 earnings on deck
That was echoed, albeit more cautiously, by UBS analyst Joseph Spak, who maintained his sell rating on the stock but nonetheless lifted his price target to $259 a share from $226.
"We continue to be impressed with Tesla’s initiatives and the progress they are making on full self-driving and Optimus" robots, he said. "Our challenge remains that the actual numbers and more easily identifiable forecasts relate to auto and energy."
"While we do agree Tesla has as good an opportunity as anyone to achieve and capitalize on these goals, more investors we speak to acknowledge there is still technology and execution risk as well as timing uncertainty (certainly with Optimus)," he added.
Tesla capital spending tops $11 billion
Tesla said its 2025 capital outlays are likely to rise to $11 billion, and remain at about that level in 2026 and 2027, as it expands and develops both its manufacturing platforms as well as the AI technologies needed to power its FSD and robotics ambitions.
"If you are a bull and believer in the AI autonomous vision for Tesla this morning, you feel even more confident in its thesis." said Wedbush analyst Dan Ives, who affirmed his outperform rating and $550 price target.
"We believe the autonomous/AI piece is 90% of the Tesla story today and thus speaks to our $2 trillion valuation thesis for Tesla over the coming 12 to 18 months," he added.
Truist Securities analyst William Stein cautioned, however, that there has been "too much cheerleading" and not enough "ground-truth" in the Tesla story, adding that investors will need more detail on Musk's broader product road map.
Stein kept his hold rating in place but lifted his Tesla price target by $22 to $373 per share.
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Piper Sander analyst Alexander Potter was also cautious, leaving his 'overweight' rating and $500 price target unchanged following last night's update. But he noted that Tesla's commentary "has never been so unabashedly bullish."
"This is a pivotal year for Tesla," Musk said. "And when we look back on 2025 and the launch of unsupervised Full Self-Driving, true real-world AI that actually works ... I think it probably will be viewed as maybe the most important year in Tesla's history."
"There is no company in the world that is as good in real-world AI as Tesla," he added.
Tesla shares closed 2.87% higher at $400.28 each Thursday, a move that extended the stock's January gain to around 5.5%.
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