This article first appeared on GuruFocus.
Tesla (NASDAQ:TSLA) has delivered one of the sharpest rallies in the S&P 500 (SPY) this month, with shares climbing more than 30% in September and nearly doubling since April after President Donald Trump paused global tariffs. Investors are leaning into the possibility that Elon Musk can reposition the company as more than an automaker, with the board’s proposed $1 trillion pay package reflecting confidence in his push toward artificial intelligence, humanoid robots, and self-driving taxis. With the stock trading near its December 2021 peak of $479.86, the upcoming third-quarter sales figures could play an outsized role in determining whether the rally has further room to run or risks losing momentum.
Analysts remain divided on the fundamentals underpinning the surge. Irene Tunkel at BCA Research argued that Tesla’s earnings have been shrinking while EV demand softens and credits vanish, suggesting the current valuation rests heavily on momentum. Ross Gerber, a long-time Tesla investor, put the core auto business closer to $150 a share, with the remainder reflecting Musk’s AI ambitions. At the same time, consumer buying has been pulled forward by the expiration of federal EV tax credits under the Trump administration, which could lead to slower sales in the coming quarters. For now, Tesla’s rally appears to be driven less by deliveries and more by enthusiasm around its next chapter.
On Wall Street, optimism about that chapter has gained traction. Wedbush analyst Dan Ives raised his target to $600, citing what he described as Tesla’s next stage of its AI autonomous path. Musk has added to the narrative, saying the company could ultimately generate 80% of revenue from AI-driven robots and even suggesting Tesla will feel almost like a sentient being. Dave Mazza, CEO of Roundhill Financial, noted that while skepticism is reasonable, the market is rewarding early leaders in embodied intelligence, and Tesla could benefit if it shows tangible progress. This week’s delivery results may influence near-term trading, but the larger question for investors is whether Tesla can evolve from a carmaker into a genuine AI platform.