Tesla (NASDAQ:TSLA) shares are having a strong session, climbing nearly 8% as investors react to an update from CEO Elon Musk regarding the company’s next-generation AI ambitions. The rally follows Musk’s confirmation that Tesla has successfully taped out its AI5 chip, a key milestone that suggests progress is being made on the hardware expected to power future self-driving and robotics efforts.
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Trade TSLA with leverageThe announcement appears to have reignited enthusiasm around Tesla’s long-term technology thesis, especially as the company continues to position itself beyond electric vehicles and deeper into AI and autonomy.
Yet, even after today’s surge, Tesla stock is still down about 12% this year, reflecting lingering concerns around EV demand, an energy shortfall in 1Q26, rising costs, increased capital expenditure needs, and the slow progress of both the robotaxi initiative and Optimus.
However, UBS analyst Joseph Spak thinks the pullback has created a “more reasonable level.”
“Current levels more evenly balance near-term demand challenges and investment period with the long-term physical AI opportunity, in our view,” the analyst went on to say.
Accordingly, Spak has upgraded his TSLA rating from Sell to Neutral, although his $352 price target remains as is and suggests the stock is overvalued by ~10%. (To watch Spak’s track record, click here)
Tesla has its fingers in many pies, and Spak has laid out his current view on its various segments.
For the core Auto business, the analyst is calling for 1.6 million deliveries in 2026, down 1% year-over-year, with Cybercab and Semi production potentially starting later this year at low volumes. Meanwhile, reports of a smaller SUV are a positive given the EV maker’s limited lineup. Spak sees deliveries reaching 2.1 million by 2030 (7% CAGR), below the Street’s estimate of 3 million, though, like many other market prognosticators, he does not see autos as the main focus for investors.
In energy, Spak attributes the 1Q26 miss to timing and forecasts storage deployments growing around 26% CAGR through 2030. The analyst has some concerns about US LFP (lithium iron phosphate) availability in late 2026–2027, though Tesla’s domestic investments should ease this over time.
For the robotaxi, expectations rose after Tesla signaled expansion to nine cities by 1H26, but recent concerns have centered on slow expansion and improvement in Austin. Still, scaling there could begin later this year. “Longer-term,” Spak added, “we think TSLA has an opportunity to offer lower $/mi transportation, which should position them among US robotaxi leaders.”
On Optimus, Elon Musk indicated Gen3 production could start this summer with high-volume output in 2027, though Spak expects delays and potential parts constraints tied to China. Despite this, the opportunity remains significant, and he thinks Tesla will emerge as a “US humanoid leader.”
Lastly, for Terafab, the planned massive semi fab, details are limited beyond Intel’s involvement. But given Tesla’s $1.3 trillion size and significant growth ambitions, Spak believes the effort is justified, particularly as current supply falls short of Musk’s targets and vertical integration could help reduce costs.
So, that’s the UBS view, but what does the rest of the Street make of Tesla’s prospects? Based on a total of 13 Buys, 11 Holds, and 6 Sells, the analyst consensus rates the stock a Hold. The forecast calls for 12-month returns of 2.5%, considering the average target clocks in at $401.13. (See TSLA stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.