Tesla Stock Gets Upgrade. Why This Analyst Says It’s an AI Buy.

Wall Street analysts project Tesla’s third-quarter deliveries of about 445,000 vehicles, according to FactSet, up from about 384,000 in the second quarter of 2025. Tesla delivered about 463,000 cars in the third quarter of 2024. (Photo by Justin Sullivan/Getty Images)

Key Points

About This Summary

• Baird analyst Ben Kallo upgraded Tesla to Buy, increasing the price target by 71% to $548, citing a coming ‘physical AI inflection’.
• Kallo’s ‘physical AI inflection’ includes AI-trained robots and self-driving cars; the price target is 63 times 2029 Ebitda.
• Goldman Sachs also raised its Tesla price target to $395 from $300, due to expectations of better third quarter vehicle deliveries.

Tesla stock just caught a bold upgrade from Wall Street. It’s all about artificial intelligence.

Baird analyst Ben Kallo raised his rating to Buy from Hold on Friday and increased his price target by 71%, to $548 from $320. There is a “physical AI inflection ahead,” he wrote.

It’s a big price target jump. It also comes after Tesla stock rallied for seven of the past eight trading sessions, adding a surprising 20%, or $230 billion in market value.

While the car business has struggled lately, global sales in the first half of 2025 fell 13%, “the road ahead is chock-full of catalysts,” including expansion of Tesla’s robo-taxi service, unveiling of Tesla’s humanoid robot called Optimus, other “bots,” as well as growth in Tesla’s energy storage business.

Tesla stock rose 2.2%, closing at $426.07, while the S&P 500 and Dow Jones Industrial Average added 0.5% and 0.4%, respectively. Friday’s gain left Tesla stock up almost 8% for the week.

AI-trained robots and self-driving cars are part of a “physical AI inflection” Kallo sees coming. His new price target values Tesla at 63 times estimated 2029 earnings before interest, taxes, depreciation, and amortization, or Ebitda. The rest of the Magnificent Seven stocks trade for about 18 times estimated 2026 Ebitda, according to FactSet, which doesn’t have estimates stretching out to 2029 for all of the companies.

Along with the Baird upgrade, Goldman Sachs recently raised its price target, but not its rating, for shares of the electric-vehicle maker. Analyst Mark Delaney took his target for Tesla stock to $395 from $300.

One reason for Delaney’s rise was better-than-expected third-quarter vehicle deliveries. Delaney expects Tesla to sell 455,000 cars in the third quarter, better than the roughly 445,000 analyst consensus compiled by FactSet. Tesla sold about 384,000 cars in the second quarter. Third-quarter U.S. EV sales have picked up, with buyers rushing to beat the removal of the $7,500 federal purchase tax credit that goes away at the end of September.

The average analyst price target for Tesla stock is now about $334 a share, according to FactSet, up from $323 about a week ago. That’s still below where shares are trading.

It isn’t all that unusual for Tesla stock to trade above the consensus analyst price target. That isn’t typical for most stocks, however. About 10% of the stocks in the S&P 500 trade above average target prices. The average analyst price target for stocks in the S&P 500 implies an average gain of about 12%, according to FactSet. Implied upside varies by industry.

Analyst price targets can generally be read in one of two ways. The target is the price analysts expect shares to reach over the coming year. Or the target price is the fair price to pay to earn an appropriate return on the stock in the future.

Overall, 45% of analysts covering Tesla stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.

Write to Al Root at allen.root@dowjones.com