The investment bank stated that it remains one of its key recommended targets after Tesla released its second-quarter earnings report. Although the electric vehicle manufacturer failed to meet market expectations in its quarterly results, resulting in a "loss" in both revenue and profit, with its automotive business revenue falling 16% year-over-year to $16.7 billion, its long-term prospects remain positive.
Morgan Stanley analyst Adam Jonas, a well-known "Tesla bull" on Wall Street, has also adjusted his company's fiscal year earnings forecast - lowering his earnings per share (EPS) forecast for fiscal year 2025 by 14%. The company explained that declining deliveries and rising operating expenses were the main reasons for this adjustment.
In his report, Jonas noted, "The second quarter performance was slightly better than expected, with free cash flow close to break-even. Tesla is at a critical stage in its transformation from a traditional manufacturer to a fully autonomous driving company, while also facing slowing sales, the elimination of electric vehicle incentives, tariff pressures, and continued investment in new businesses that have long been unprofitable."
As an automotive and clean energy company, Tesla is actively applying artificial intelligence to its autonomous driving technology and robotics projects, and its AI strategy has become one of the core pillars of the company's long-term growth.
However, the report also reminds investors that although TSLA has great potential, some AI concept stocks have higher short-term upside potential and lower downside risk. The report concludes by recommending focusing on high-quality AI stocks that are significantly undervalued and potentially benefit from Trump-era tariff policies and the onshoring trend of manufacturing. Readers can access its free report to obtain a list of the best short-term AI investment targets.
