Morgan Stanley has once again named Tesla, Inc. (NASDAQ: TSLA) its “Top Pick” among U.S. automakers, emphasizing that the stock’s nearly 30% decline this year represents a “clear buyers’ strike” rather than a fundamental weakness. The investment bank maintained an ‘Overweight’ rating and a $430 price target, signaling long-term confidence despite growing concerns over Tesla’s weakening car deliveries and market share.
Tesla Faces Delivery and Market Share Challenges
A recent Bloomberg report indicated that Tesla’s January sales in Europe fell 45% year-over-year, even as overall EV sales in the region surged 37%. Analysts at Morgan Stanley acknowledged that Tesla’s 2025 deliveries might decline annually but framed this as an “attractive entry point” for investors.
“Tesla’s softer auto deliveries are emblematic of a company transitioning from an automotive pure play to a highly diversified bet on AI and robotics,” the firm stated. Tesla’s growing focus on artificial intelligence (AI), energy storage, and software services is seen as a long-term catalyst that could drive future stock performance.
Tesla’s AI and Robotics Ambitions Drive Optimism
Morgan Stanley’s bullish stance is heavily influenced by Tesla’s prospects in AI and autonomy. CEO Elon Musk has repeatedly asserted that Tesla’s long-term value extends beyond electric vehicles, citing future revenue potential from humanoid robots and self-driving technology. Musk even claimed that Tesla’s profits could rise by 1,000% over the next five years, assuming “outstanding execution.”
However, Morgan Stanley cautioned that high expectations surrounding Tesla’s Full Self-Driving (FSD) and robotaxi ambitions could be premature due to regulatory challenges. Additionally, the firm highlighted risks tied to China’s growing EV market competition, prolonged EV demand softness, and Musk’s ongoing efforts to secure greater control over Tesla’s AI strategy.
Market Sentiment Remains Divided
Despite Morgan Stanley’s confidence, Tesla’s stock sentiment among retail investors has soured. On Stocktwits, Tesla remains in “extremely bearish” territory as skepticism grows. One user pointed out that Tesla generates half the profits of Volkswagen yet trades at “twenty times” its valuation, calling it “the biggest bubble of all time.” Another predicted that Tesla could dip below $200 due to intensifying competition from Chinese EV makers offering “cheaper cars and better technology.”
Wall Street’s Mixed Ratings on Tesla
According to Koyfin data, Tesla shares currently trade about 21% below analysts’ average price target of $345.56. Among the 47 Wall Street analysts covering the stock, the ratings are split as follows:
- 20 analysts: ‘Buy’ or ‘Strong Buy’
- 15 analysts: ‘Hold’
- 12 analysts: ‘Sell’ or ‘Strong Sell’
Tesla stock fell 2.8% on Monday, extending losses in after-hours trading. As Tesla navigates macroeconomic headwinds and competitive pressures, investors remain divided on whether its AI and robotics ambitions will justify its premium valuation in the long run.
