Tesla (NASDAQ: TSLA) shares reversed early losses on Tuesday, trading higher as market participants shifted their attention to the company's artificial intelligence initiatives, including its robotaxi service and humanoid robot development. The stock had entered the session down roughly 25% year-to-date, with only a modest 1% gain over the past 12 months, reflecting a prolonged period of investor caution amid uncertainty about the company's growth trajectory.
The EV maker launched an AI-trained robotaxi service in June 2025, though its expansion across multiple cities has been gradual. Tesla is also preparing to introduce the Cybercab, a steering-wheel-less robotaxi, according to a report from The Information. Additionally, the company continues to develop Optimus, an AI-powered humanoid robot, although recent updates on its capabilities have been limited.
Baird analyst Ben Kallo noted that investor attention remains squarely on Tesla's robotics and autonomous driving ventures rather than its traditional automotive and energy segments. He described the current environment as one where fundamentals have been "extremely de-emphasized." Kallo maintains a Buy rating on Tesla with a $475 price target.
According to FactSet, only 45% of analysts covering Tesla rate the shares as Buy, below the typical 55% to 60% Buy-rating ratio for S&P 500 companies. The average analyst price target stands at approximately $374, down from a March peak of around $415.
GLJ Research maintains bearish stance
GLJ Research reiterated its Sell rating and maintained a $24.86 price target, implying a 92% downside from current levels. Analyst Gordon Johnson highlighted Tesla's second-quarter operating margin of 1.4%, negative free cash flow of $1.1 billion, and a decline in energy gross margin to 20.4%.
Johnson also questioned the viability of Tesla's robotaxi ambitions, arguing that the company's Full Self-Driving (FSD) performance does not yet justify the valuation embedded in the stock. He cited tracked data showing FSD v14 on Tesla's HW4 system disengaging approximately every 40 miles. The data covers 865 vehicles, with 18 active in the past week. Additionally, Johnson pointed to 22 collisions reported in National Highway Traffic Safety Administration filings over the past 12 months, raising concerns about the readiness of Tesla's autonomous driving technology.
These concerns extend to the Cybercab, Tesla's planned steering-wheel-free robotaxi. While Johnson expects the upcoming Austin event to attract attention, he does not view the event itself as evidence that the vehicle is ready for widespread deployment.
Johnson also questioned Tesla's valuation estimates for its future businesses, citing management's projections of roughly $20 trillion for Optimus and about $5 trillion for autonomy and other ventures.
SpaceX merger speculation persists
Investors are also monitoring speculation about a potential combination between Tesla and SpaceX, both led by Elon Musk. Gary Black, managing partner at The Future Fund, believes there is a high probability of a Tesla-SpaceX merger this year but remains cautious about Tesla's valuation. He expects SpaceX could potentially make an all-stock offer for Tesla at a roughly 20% premium.
Black said such a transaction could create strategic synergies and simplify Musk's responsibilities across the two companies. However, he warned that existing Tesla shareholders could face substantial dilution in an all-stock transaction. Black estimates Tesla is trading at roughly 195 times 2026 earnings and argues that its valuation leaves limited room for attractive returns even with strong long-term earnings growth.
For context, Tesla's recent rebound attempt comes amid broader market dynamics, including AI-driven rallies across tech stocks. Meanwhile, cooler inflation data could provide additional support for growth names like Tesla.
This article is for informational purposes only and does not constitute financial advice.
