Investing.com — Tesla continues to be Piper Sandler’s “#1 buy-and-hold idea” as the company raises its price target on the stock from $315 to $500.
The company’s analysts believe investors are starting to recognize Tesla’s (NASDAQ:) potential in the “real-world AI” space, which is causing portfolio managers to consider upside scenarios more seriously.
Piper Sandler said in a recent note that she had curated more than a dozen Tesla-related data sets.
Despite the uncertainty surrounding short-term financing, particularly vehicle deliveries and automotive gross margins, the long-term outlook remains promising.
Piper Sandler said, “We expect Tesla to deliver 1.96 million units in 2025 (compared to 1.79 million in 2024), but we expect over 100,000 incremental units to come from unknown vehicles, and another from the Cybertruck. We anticipate 70,000 incremental units,” Piper Sandler said.
However, they caution that this forecast is uncertain and a potential downside may not become apparent until a future update.
In terms of gross margin, Piper Sandler maintains a more positive outlook, expecting solid performance after a quarter as Tesla continues to launch new products.
Looking to the future, Piper Sandler has adjusted her long-term delivery expectations and now predicts that Tesla will peak production at around 4.6 million units per year by 2032.
They believe the focus will shift from launching new cars to popularizing fully self-driving (FSD) software.
“We are now modeling the contribution of FSD licenses,” analysts said, adding that Tesla’s existing business is valued at just under $300 per share, including FSD.
For valuation, Piper Sandler is switching to a P/E-based methodology, applying a $500 price target based on 120x FY26E EPS.
They expect that within a year, investors will have a clearer understanding of Tesla’s product flow, allowing them to focus on more ambitious topics such as FSD efficiency and Tesla’s broader AI ambitions.
