TSLA: AI And Autonomy Focus Will Deepen Risks From Weakening Core Demand

Analysts have modestly trimmed their Tesla price target to approximately $391 per share, reflecting slightly higher discount rates and marginally lower long term growth and margin assumptions, even as they continue to see meaningful upside from AI, autonomy and energy storage over time.

Analyst Commentary

Recent Street research on Tesla reflects a wide dispersion of views, with some firms leaning into the company’s AI and robotics optionality while others remain focused on execution risk in the core auto and capital intensity of the growth agenda.

Bullish Takeaways

• Bullish analysts continue to lift price targets, in some cases toward the $500-$600 range, arguing that Tesla’s long term value will be defined by autonomy and robotics rather than its legacy auto business.
• Several notes highlight strong Q3 delivery data and record energy storage volumes as evidence that Tesla can still generate volume growth and incremental cash flow to reinvest, even as the EV tax credit rolls off.
• Supporters point to new, lower priced Model 3 and Model Y variants as a way to defend share and rebuild a 500k quarterly delivery run rate, which they see as critical to underpinning current valuation multiples.
• Bullish analysts also emphasize Tesla’s first mover positioning in physical AI and robotics, viewing the company as uniquely placed to monetize these platforms at scale and justifying a premium versus traditional automakers.

Bearish Takeaways

• Bearish analysts flag that October delivery trends in key regions are softening after the Q3 pull forward, reinforcing concerns that recent strength may represent a local peak rather than a sustainable inflection in the core auto business.
• Several notes reiterate cautious stances and lower or restrained targets in the $120-$215 range, arguing that consensus earnings and volume expectations into 2026 remain too optimistic relative to competitive and macro headwinds.
• There is growing focus on rising operating expenses and a step up in capital expenditures, which could pressure free cash flow and compress valuation if new AI, autonomy and energy initiatives do not ramp as quickly as implied.
• The upcoming shareholder vote on Elon Musk’s compensation package is viewed as a key risk event, with some highlighting that any perceived reduction in his engagement with Tesla could trigger a negative reassessment of the equity story.

What's in the News

• Tesla’s core vehicle business is under mounting pressure as sales soften across Europe, China and the U.S., with global deliveries expected to fall 7% this year, even as CEO Elon Musk focuses attention on robotics and his pay package (Reuters).
• Regulatory and legal scrutiny of Tesla’s automated driving and robotaxi ambitions is intensifying, including fresh NHTSA inquiries into door handle and Full Self Driving safety issues and new lawsuits tied to crashes and alleged technology risks (CNBC, Bloomberg, NBC News, Electrek, AP).
• Shareholders have approved Elon Musk’s record near $1T compensation package despite opposition from major institutions and proxy advisers, which sharpens debate over governance, key person risk and Musk’s control as Tesla pivots to AI and autonomy (NY Times, CNBC, Bloomberg, Reuters, Business Insider).
• Tesla is pushing forward on autonomous mobility and new products, unveiling the fully driverless Cybercab concept, expanding robotaxi testing in states like Arizona and Texas, and hinting at future platforms such as flying cars, while facing questions about regulatory compliance and safety timelines (Forbes, Bloomberg, The Information, Electrek, The Information).
• Beyond autos, Tesla is broadening its ecosystem with steps such as permitting for ride hailing in Arizona, integrating its Supercharger network with third party fleets and OEMs, and developing in house AI chips, which reinforces its long term platform narrative around energy, charging and physical AI (Reuters, Reuters, CNBC, DigiTimes).

Valuation Changes

• Fair Value Estimate has edged down slightly to approximately $391 per share, from about $393 previously, reflecting modestly more conservative assumptions.
• Discount Rate has risen slightly to about 10.15%, from roughly 10.11%, implying a marginally higher required return for equity investors.
• Revenue Growth has ticked down slightly to about 16.85% from roughly 16.89%, indicating a modestly slower long term top line outlook.
• Net Profit Margin has fallen slightly to around 10.20% from about 10.25%, incorporating somewhat lower long run profitability expectations.
• Future P/E multiple has increased marginally to about 123.5x from roughly 123.2x, suggesting a slightly higher valuation placed on forward earnings despite the modest estimate trims.