Why Tesla Stock Is Rising Again and Microsoft Is Now the Mag 7 Laggard

Tesla stock has surged 45% since the beginning of July to near record levels—firmly beating the wider Magnificent Seven, up 20% over that period. (Getty Images)

Key Points

About This Summary

• Tesla stock surged 45% since July, outperforming the Magnificent Seven, driven by catalysts like analyst upgrades and strong delivery estimates.
• Mizuho raised Tesla’s price target to $450, citing a better 2026 outlook and potential price increases for models next year.
• UBS analysts estimate third-quarter deliveries of 475,000 for Tesla, an 8% increase over Wall Street consensus, due to strong US demand.

Tesla stock lagged behind other names in the so-called Magnificent Seven to start the year, but its recent rally proves it belongs in the group of megacap tech giants.

Conversely, Microsoft’s place now looks precarious.

The electric-vehicle maker’s stock ticked up 0.8% in early trading Tuesday following a 1.9% jump on Monday. The shares were outperforming the wider market—the S&P 500 was flat.

Two catalysts could be moving Tesla stock early Tuesday.

The first is that analysts at Mizuho, who rate Tesla Outperform, bumped their price target on the stock to $450 from $375. Tesla shares closed Monday at $434.21.

The analysts also raised price targets on GM, NIO, and other auto makers, seeing the 2026 outlook as better than previously expected and noting the possibility that prices could increase for models next year.

There was also some good news from analysts led by Patrick Hummel at UBS, who estimated third-quarter deliveries would come in at 475,000—up from their previous view of $431,000. A deliveries print at 475,000 would be around 8% above the Wall Street consensus.

“Our updated view is informed by: Strong deliveries in the U.S. as Tesla pushes, and consumers take advantage of, the $7,500 IRA EV tax credit before its expiry at the end of September 2025,” Hummel wrote in a Tuesday note. “We believe 3Q25 could be the highest quarterly U.S. deliveries since mid-2023 and potentially the highest ever,” he added, talking about the third quarter of this year.

Tesla had a bad start to the year, with the stock falling more than 20% in the first six months of 2025. Investors may have been justified in wondering whether the stock was still worthy to be in the Magnificent Seven—a group that also includes Alphabet , Amazon, Apple , Meta Platforms, Microsoft, and Nvidia . The Mag 7 as a whole eked out a 1% gain in the six months to the start of July.

But Tesla’s performance since then has been remarkable. The stock has surged 45% since the beginning of July to near record levels—firmly beating the wider Mag 7, up 20% over that period.

Several factors have helped Tesla shares rally including CEO Elon Musk’s stock purchases, the expansion of self-driving services, and the latest Federal Reserve interest-rate cut.

“In general, we’d say that the auto business, and numbers overall, have tended not to matter for Tesla stock,” the analysts at UBS led by Hummel wrote. “More broadly, we believe the stock’s recent performance has been driven more by: 1) An ‘engaged’ Musk given the new compensation proposal, Musk purchasing $1 billion of stock, and recent Musk comments/posts on X and other mediums. 2) Enthusiasm and ‘positive data points’ on robotaxi. 3) Humanoid robot optionality.”

They added: “We believe when it comes to Tesla, the market is not focused on valuation and rather looking at incremental headlines (which have been, and could continue to remain positive).”

For now, fears of Tesla’s underperformance are in the dust. One analyst is instead drawing attention to Microsoft stock, which has crawled behind its megacap peers—the shares advancing less than 5% since July 1.

“Microsoft is the worst Elite 8 performer so far in [the third quarter of 2025] (along with Amazon),” analyst Ben Reitzes of Melius Research wrote in a Monday note. Some analysts add chip maker Broadcom into the list of stock-market heavyweights to expand the Magnificent Seven into the Elite Eight.

Reitzes drew attention to Tesla’s impressive performance so far this quarter—during which it compares with Alphabet, up 45% in the same period to lead that group of eight stocks.

“[Microsoft’s] underperformance vs. its rival Alphabet is most stark,” Reitzes wrote.

“This outperformance comes even after Microsoft posted a great June quarter with strong guidance for Azure,” Reitzes added, referring to Microsoft’s cloud-computing platform that includes services such as artificial intelligence. “Microsoft’s stock may be clouded by a lack of clarity around its relationship with OpenAI (the big driver of Azure) especially after 2030, but it should be a big help for a while.”

Nevertheless, Reitzes sees Microsoft stock as likely to perk up, perhaps getting closer to Tesla and its other Big Tech peers. Checks on Microsoft’s Azure “are showing no slowdown and Microsoft should make some compelling announcements…in November,” Reitzes noted.

Microsoft shares were down 0.6% in early trading.