Tesla (TSLA) Climbed in Q2 Despite Challenges

Baron Funds, an investment management company, released its “Baron Focused Growth Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The Fund maintained its strong relative performance from the first quarter into the second quarter, with overall performance improving as it completely recovered from the losses experienced earlier, which were related to economic concerns stemming from newly implemented tariffs by the administration. Most of the firm’s company management teams expect the tariffs to have a minimal impact, as costs will likely be shared with suppliers and passed through in small price increases that won’t significantly affect demand. As a result of this clarity, the fund appreciated by 12.78% (Institutional Shares) compared to an 11.31% gain for the Russell 2500 Growth Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Baron Focused Growth Fund highlighted stocks such as Tesla, Inc. (NASDAQ:TSLA). Tesla, Inc. (NASDAQ:TSLA) designs, develops, manufactures, leases, and sells electric vehicles, as well as energy generation and storage systems. The one-month return of Tesla, Inc. (NASDAQ:TSLA) was -2.25%, and its shares gained 48.44% of their value over the last 52 weeks. On July 31, 2025, Tesla, Inc. (NASDAQ:TSLA) stock closed at $308.27 per share, with a market capitalization of $994.309 billion.

Baron Focused Growth Fund stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its second quarter 2025 investor letter:

“Tesla, Inc. (NASDAQ:TSLA) designs, manufactures, and sells electric vehicles (EVs), solar products, and energy storage solutions, while also developing advanced real-world AI technologies. Despite ongoing macroeconomic challenges and regulatory complexities, shares climbed after Tesla completed a limited commercial rollout of its highly anticipated robotaxi business in Austin—following more than a decade of development and billions of dollars in investment. This milestone signals a potentially transformative shift in the automotive industry and opens up a sizable new market beyond the company’s core operations. Investor sentiment also improved after Elon Musk stepped back from government-related engagements, boosting confidence in Tesla’s near-term execution. Tesla introduced a refreshed Model Y globally, featuring design and performance upgrades, and outlined plans to unveil new mass-market models starting next quarter. Meanwhile, the company is progressing toward scaling production of its humanoid robot, adding another dimension to its long-term growth story.”

Is Tesla, Inc. (TSLA) The Mega Cap Stock Gaining Bullish Momentum This Week?

Tesla, Inc. (NASDAQ:TSLA) is in 23rd position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 104 hedge fund portfolios held Tesla, Inc. (NASDAQ:TSLA) at the end of the first quarter, which was 126 in the previous quarter. While we acknowledge the risk and potential of Tesla, Inc. (NASDAQ:TSLA) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TESLA, INC. (NASDAQ:TSLA) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Tesla, Inc. (NASDAQ:TSLA) and shared the list of must-watch AI stocks on Wall Street. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.