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Tesla stock had a tough first half of 2024, but Wall Street is eyeing a turnaround.
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Second-quarter deliveries were down but weren't as bad as analysts had expected.
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Now all eyes are on its Robotaxi and AI initiatives as the next phase of growth commences.
After a rocky stretch for Tesla stock and a lot of drama surrounding Elon Musk's legal battles, the electric-vehicle maker could finally be poised for a comeback, according to a chorus of Wall Street analysts.
Investors have been eyeing a potential rebound in the stock for more than a year, with Tesla sales having slid by 15% over the past 12 months. Tesla deliveries slumped for the second quarter in a row, but they were stronger than analysts had expected, clocking in at 443,956 compared with estimates of 436,000.
Those figures could be a sign that better days are ahead for the carmaker, especially as Musk puts the "soap opera" surrounding his pay package to bed and investors eye artificial-intelligence developments on the horizon.
"Tesla getting its mojo back?" Morgan Stanley strategists said in a note on Tuesday. "Little more than 2 weeks ago our clients were preparing for shareholders to reject Elon Musk's 2018 comp package potentially setting up a change of management and strategy, compounding many months of negative newsflow. Fast forward to today, clients are beginning to ask us about positive catalysts into 2Q results and beyond."
Tesla also reduced its inventory over the second quarter and boosted its energy storage to an all-time high. The strategists said the higher energy storage was a "show stealer" update, as it suggests Tesla could benefit from increased energy demand stemming from the AI boom.
"As Gen AI acceleration spurs a multigenerational increase in energy demand, electricity generation, and data center investment, we believe investors will begin to pay more attention to Tesla Energy which we value at $36 per Tesla share ($130bn) as the business uniquely positioned to benefit from investment in the US electric grid accelerated by the AI boom," they said.
Morgan Stanley reiterated its "overweight" rating on Tesla stock with a price target of $310, implying another 30% upside.
"The stock continues to ride a wave of positive momentum following its annual meeting in mid-June," said Garrett Nelson, a senior stock strategist at CFRA Research, adding, "We think Musk successfully shifted investor focus to long-term opportunities in AI, robotics, energy storage, and other business lines, diverting attention away from near-term challenges."