After a volatile week, Tesla Motors (TSLA) shares climbed on Monday as investment bank Stifel expressed optimism about the company's prospects.
Analyst Stephen Gengaro raised Tesla's price target from $483 to $508 while maintaining a "Buy" rating. His assessment was based on a sum-of-the-parts valuation analysis, highlighting Tesla's strengths in Full Self-Driving (FSD) technology and robotaxi services.
"We believe Tesla's AI-driven FSD and robotaxi initiatives are central to its growth story and a key component of our valuation," Gengaro wrote in a client note.
By midday Monday, Tesla shares were up 3%.
Regarding FSD, Gengaro noted that Tesla's advanced AI technology would enhance the system's decision-making capabilities, reduce latency in responses, and assist in tasks like parking. The company's cutting-edge "Cortex AI training cluster" at Giga Texas is expected to accelerate FSD development—Gengaro remarked that he had already observed "significant improvements" in the latest version.
Gengaro also remains optimistic about Tesla's robotaxi rollout. Currently, the service is available in Austin, Texas, and the San Francisco Bay Area as a paid offering.
"Management indicated during the Q3 earnings call that they plan to expand the service to 8–10 major metropolitan areas by late 2025," Gengaro noted. "In Austin, Tesla has expanded coverage three times since its June 2025 launch, though safety drivers remain in place. The Bay Area rollout is progressing similarly, with safety drivers still required."
Stifel's bullish outlook comes with one key concern: Tesla's automotive margins. Declining per-vehicle profitability remains a core issue, and average selling prices are expected to remain flat in the near term. However, Gengaro believes Tesla's lower-priced "Standard Range" Model Y and Model 3 EVs could help offset the impact of expiring EV tax credits.
Monday's gains followed a turbulent week for Tesla. Despite a slight rebound on Friday, the stock fell 5.9% for the week. On Thursday and Friday, shares briefly dipped below the $400 support level before recovering to close at $404.35—with Thursday marking the lowest point since September.
Recent declines were partly attributed to CEO Elon Musk securing what has been called the "largest potential compensation package in history," which could be worth nearly $1 trillion if he meets ambitious performance targets in the coming years.
Adding to investor concerns, Musk's longtime associate and former PayPal executive Peter Thiel significantly reduced his Tesla holdings. According to the latest SEC 13F filings, Thiel's hedge fund, Thiel Macro, sold 207,613 Tesla shares in Q3, leaving it with just 65,000—a 76% reduction in exposure.
Thiel also liquidated his entire stake in Nvidia (nearly 538,000 shares), leading market observers to speculate that he may be winding down his AI-related investments.
