Tesla could reach a market capitalization of $2 trillion by the end of 2025 as the company's autonomous driving vision takes shape, as stated by Wedbush Securities. Donald Trump's return to the White House is expected to be a 'total game changer' for the electric vehicle maker's autonomous driving and artificial intelligence opportunities over the coming years.
The brokerage revealed in a Sunday client note that Tesla's AI and autonomous opportunity is valued at least at $1 trillion. These initiatives 'will now get fast tracked' under Trump's reign amid possibly easier regulatory conditions. Tesla Chief Executive Elon Musk was a key campaigner for President-elect Donald Trump in the 2024 presidential election.
'The $1 trillion of AI valuation will start to get unlocked in the Tesla story,' analysts from Wedbush led by Daniel Ives noted in the report. 'We believe the march to a $2 trillion valuation for Tesla over the next 12 to 18 months has now begun in our view with full self-driving and autonomous penetration of Tesla's installed base and the launch of Cybercab representing the golden goose.' The brokerage projects that the company's full self-driving (FSD) penetration could increase to more than 50%, significantly altering its financial model and margins in the future.
Wedbush continues to see Tesla as the most 'undervalued AI play in the market' and noted that a 'regulatory friendly' Trump administration is expected to help unlock autonomous and AI value for the company's stock. In addition, Wedbush forecasts strong delivery demand for Tesla in its crucial China market.
Concerning Trump's proposed elevated tariffs on China, the brokerage believes that Musk will likely assume a 'very big role' in the new administration and will be heavily involved in discussions regarding the China tariff issues. 'We anticipate some carve outs for both Tesla and Apple on the China tariff front,' stated Ives.
Wedbush maintained its outperform rating on Tesla's stock and raised its 12-month price target to $515 from $400. The brokerage also set a bull-case price target for Tesla stock at $650 for 2025..