Why Tesla Stock Is a ‘Must Own’

Coming into Monday trading, Tesla stock was up about 2% year to date and up about 90% over the past 12 months. (Getty Images)

Key Points

• Tesla stock increased 2.5% to $425 on Monday, recovering from a 5.1% drop on Friday.
• Trade tensions between the US and China, including tariff threats, impacted markets, though Tesla’s China sales are significant.
• Tesla’s stock has risen 90% over the past year, driven by AI opportunities like its new robo-taxi service.

Tesla stock rose Monday, bouncing back from its steep drop on Friday. A new call on Wall Street is helping.

Shares of the electric vehicle maker shot up 5.4%, closing at $435.90. The S&P 500 and Dow Jones Industrial Average rose 1.6% and 1.3%, respectively.

A new Buy rating from Melius Research analyst Rob Wertheimer boosted the stock. He launched coverage with the rating and a $520 price target.

“We see Tesla shares as a must-own,” Wertheimer wrote. “The disruptive force of AI will wreck multi-trillion dollar industries, starting with auto.”

AI can disrupt industries. In cars, a self-driving robotaxi could replace a household’s second car—and Tesla is well-positioned to capitalize on AI trends.

“Tesla and the Musk ecosystem can, and in a combination of tech and design/manufacturing that no one today can replicate,” Wertheimer said.

The auto maker uses AI computing to train its cars to drive and its robots to do useful tasks.

Overall, 47% of analysts covering the stock rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Tesla stock is about $367.

Monday’s move came after shares plunged 5.1% on Friday, with the S&P 500 dropping 2.7%. Trade tensions flared up again after China threatened to restrict some exports of rare earth materials. President Donald Trump responded with threats of new import tariffs on Chinese-made goods.

The president eased fears a little on Sunday, posting on Truth Social: “Don’t worry about China, it will be fine,” adding that President Xi “doesn’t want Depression for his country, and neither do I.”

Tesla doesn’t import a lot from China, but it sells a lot of EVs made in its plant near Shanghai. In the first half of 2025, it sold about 263,000 cars to Chinese buyers, accounting for almost 40% of Tesla’s global car sales.

Coming into Monday trading, Tesla stock was up about 2% so far this year and up about 90% over the past 12 months. Investors haven’t worried too much about car sales or trade issues lately. They have focused mainly on Tesla’s AI opportunities. The company launched an AI-trained robo-taxi service in Austin, Texas, in June. It’s working to expand the service across the country

Recent gains have left Tesla stock trading for about 165 times estimated next year’s earnings, according to FactSet, up from about 70 times a year ago.

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