By Al Root
Tesla stock is trying for seven consecutive gains on Friday, as investors look for progress on its artificial intelligence applications, including robo-taxis and robots.
There is reason for some optimism on the AI front, according to a recent report from Morgan Stanley.
Tesla uses AI to train its robo-taxis to drive. Tesla launched a robo-taxi business in Austin, Texas, in June. It operates in four cities, including three in Texas. Progress has been slow. Tesla operates a few dozen robo-taxis in Texas, according to Bloomberg. Alphabet's Waymo operates more than 500.
Tesla CEO Elon Musk has said the rollout has been slow partly because safety is his top priority. Morgan Stanley analyst Andrew Percoco recently reviewed safety data for Tesla robo-taxis and noted improvements.
"With Tesla's approach to autonomy still heavily debated, investors are closely watching 'rate of change' in monthly safety data," wrote Percoco in a recent report. Tesla uses only optical cameras for its self-driving tech. Waymo uses a suite of sensors, including cameras and Lidar, which is essentially laser-based radar.
"Amidst what has been an intentionally cautious rollout in Austin, we have observed a significant improvement in accident rates," he added. There were incidents every 50,000 miles in late 2025. Now the gap between incidents is over 150,000 miles.
Waymo is at 460,000 miles between incidents, according to Morgan Stanley, but it was also at about 150,000 miles after nine months of operations. (Waymo has been operating robo-taxis since 2023.)
The size of Tesla's robo-taxi business is "immaterial to earnings this year," adds Percoco, but he says investors are most interested in improvement. He's probably right. Robo-taxi optimism is one reason shares trade for north of 200 times expected earnings over the coming 12 months.
Shares of the electric-vehicle maker were down 0.4% Friday at $440.20, while S&P 500 and Dow Jones Industrial Average futures were up 0.1% and 0.2%, respectively.
Percoco rates Tesla stock Hold and has a $415 price target.
Heading into Friday trading, Tesla stock had risen for six consecutive days, gaining more than 9%. The biggest reason for the rise might be recent trading. Tesla stock has bobbed up and down for a while, with investors looking for concrete news about its AI applications. The current run started after a mini-losing streak that followed a mini-winning streak. Both streaks were tied to hoped-for Chinese approval of Tesla's AI-trained Full Self-Driving driver-assistance product, which hasn't come yet.
FSD approvals in new regions offer Tesla a way to make more money from its AI applications. Tesla reported about 1.3 million FSD subscriptions at the end of the first quarter.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 29, 2026 07:57 ET (11:57 GMT)
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