Market Analysis

Tesla's Path to a $1 Trillion AI Valuation: Wedbush Expands Price Target

Amos Simanungkalit · 16 Dec 202422.6K Views

Image Credit: Reuters

Wedbush Securities has raised its price target for Tesla (NASDAQ:TSLA), citing accelerated advancements in the company’s autonomous and artificial intelligence (AI) initiatives, which are expected to benefit from a more favorable regulatory environment under the upcoming Donald Trump administration.

Maintaining an "outperform" rating, Wedbush has increased its price target to $515 from $400, with a bullish forecast of $650 per share by 2025.

The firm sees Tesla’s potential in AI and autonomous driving as a $1 trillion opportunity. Analysts highlighted Tesla’s Full Self-Driving (FSD) technology as key, estimating that its penetration in the Tesla fleet could surpass 50%, significantly impacting the company’s financial model and margins.

“We believe Tesla could reach a $2 trillion market cap by 2025 as its autonomous vision unfolds, alongside strong delivery demand, particularly in China,” the analysts wrote.

Wedbush also underscored the strategic significance of Cybercab, Tesla’s planned autonomous ride-sharing service, as a crucial factor in achieving this valuation.

The analysts anticipate that the Trump administration will ease regulatory hurdles that have previously slowed Tesla’s progress in autonomous driving, describing this shift as a potential game-changer that aligns Tesla’s goals with China’s autonomous technology timeline.

China remains a key market for Tesla, and Wedbush expects possible tariff exemptions during trade talks in 2025. The firm believes Tesla CEO Elon Musk will play an influential role in these discussions, helping to mitigate geopolitical risks that could affect the company’s growth in China.

Additionally, Wedbush emphasized Tesla’s broader strategy, positioning the company as a leader in disruptive technologies rather than just a car manufacturer. The firm noted that developments in Optimus, Tesla’s humanoid robot, could further boost growth, though this is not included in the current valuation.