On Sunday, Wedbush analyst Dan Ives raised his price target for Tesla from $400 to $515, making it the highest price target on Wall Street. He also gave a target price of $650 under an "optimistic scenario," which would bring Tesla's market capitalization to approximately $2.1 trillion, while the current new target price corresponds to a market capitalization of approximately $1.7 trillion.
In his report, Ives stated that the Trump administration will be "a game-changer for Tesla and Musk in the fields of autonomous driving and artificial intelligence in the coming years."
Tesla uses artificial intelligence-based computing technology to train its cars to achieve autonomous driving, and its top-level driver assistance software—Full Self-Driving (FSD)—continues to be improved. The software is currently capable of completing driving tasks most of the time, but still requires human supervision. At the same time,GoogleWaymo, the self-driving company owned by its parent company Alphabet (GOOGL.US, GOOG.US), completes more than 150,000 driverless taxi services every week and plans to expand its services to more cities by 2025.
As the technology matures, Ives and many Wall Street analysts predict that Trump's policies will make it easier to provide autonomous driving services. In his Sunday report, he wrote: "We believe that Tesla's march toward a $2 trillion market capitalization over the next 12 to 18 months has begun."
Ives has been a long-time bull on Tesla, giving the stock a "buy" rating. However, the significance of this target price increase lies in addressing an unusual phenomenon—Tesla's recent stock price increase has exceeded the highest target price of mainstream Wall Street brokerages.
Prior to Monday's trading, Tesla's stock price had risen 73% since the U.S. election on November 5, with a year-to-date increase of 76%. This rapid surge has pushed its stock price even above the highest target price of $420 previously set by Daiwa analyst Jairam Nathan.
It is extremely rare for a stock price to exceed Wall Street's highest target price. Historical data shows that the last time Tesla's stock price exceeded $400 was at the end of 2021, when only a few analysts in the market had targets above $467.
Now, investors finally have a target price well above last Friday's closing price of $436.23, which may give them some confidence. However, whether Tesla's stock price can continue its epic upward trend remains to be seen.
As of the close of trading on Monday, Tesla's stock price had risen about 86% year-to-date, just 11% short of Ives' new target price of $515.
