On Sunday, Wedbush analyst Dan Ives raised his price target on Tesla to $515 from $400, making it the highest price target on Wall Street. He also gave a price target of $650 under an "optimistic scenario," which would bring Tesla's market cap to about $2.1 trillion, compared with the current new price target corresponding to about $1.7 trillion.
Ives said in the report that the Trump administration will be a "game-changer for Tesla and Musk in the autonomous driving and artificial intelligence space in the coming years."
Tesla uses artificial intelligence-based computing technology to train cars to drive autonomously, and its highest level of driver assistance software, Full Self-Driving (FSD) capabilities, continue to improve. The software is currently capable of completing driving tasks most of the time, but still requires human supervision. In the meantime,GoogleWaymo, the self-driving company owned by parent company Alphabet (GOOGL.US, GOOG.US), completes more than 150,000 driverless taxi services per week and plans to expand Waymo services to more cities by 2025.
As technology matures, Ives and many Wall Street analysts expect that Trump policies will make it easier to provide autonomous driving services. "We believe Tesla's march toward a $2 trillion market cap over the next 12 to 18 months has already begun," he wrote in Sunday's report.
Ives has been a long-term bull on Tesla, with a "buy" rating on the stock. However, the significance of this price target increase is to address an unusual phenomenon-Tesla's stock price gains have surpassed the highest price targets of mainstream Wall Street brokerages recently.
Prior to Monday's trading, Tesla shares had risen 73% since the Nov. 5 U.S. election, with a 76% gain during the year. The rally was swift, sending its shares even above the previous maximum price target of $420 set by Daiwa analyst Jairam Nathan.
This phenomenon of stock prices beating Wall Street's highest price targets is very rare. Historical data shows that the last time Tesla stock exceeded $400 was in late 2021, when only a handful of analysts in the market also had price targets above $467.
Now that investors finally have a price target well above last Friday's closing price of $436.23, it may give them some confidence. However, it still takes time to test whether this epic rise in Tesla's stock price can continue in the future.
By the end of trading on Monday, Tesla shares have gained about 86% over the year and are just 11% short of Ives's new price target of $515.
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