UBS Sticks With Sell on Tesla (TSLA) as AI Optimism Runs Ahead of Fundamentals

Tesla, Inc. (NASDAQ:TSLA) is one of the AI Stocks on the Market’s Radar. On January 5, UBS analyst Joseph Spak reiterated a Sell rating on the stock with a $247.00 price target. While the firm is bullish on Tesla’s technological progress, it believes that AI upside is more than priced in.

According to Spak, Tesla’s stock continues to rise despite declining electric vehicle sales and negative earnings revisions, with the bull case remaining about robo taxis and Optimus. Consensus EPS estimates for 2025 and 2026 are an estimated 50% and 46% lower than they were a year ago.

The firm believes that the market is assigning a higher value to Tesla’s artificial intelligence ventures, while applying a declining valuation to the company’s core EV business.

Photo by Tesla Fans Schweiz on Unsplash

“So in our view, given a declining valuation for TSLA’s EV business, the market is already assigning a higher and higher value to the AI ventures. While the TAM for these ventures may be large, they could also be further out (especially Optimus). Still, this could make 2026 another year of milestone catalysts propelling the stock.”

UBS highlighted several positive catalysts working in favour of Tesla, including removing safety driver in Austin robotaxis, expansion of the ODD and the number cities for robotaxi, opening robotaxi for public use, FSD version updates, Cybercab production update, and Optimus V3 updates.

Besides these catalysts, Tesla’s technological progress is also worth noting, but is already baked into the stock price.

“Potential positive catalysts include: 1) taking out the safety driver in Austin robotaxi, 2) expanding the ODD and the number cities for robo-taxi, 3) opening up robo-taxi to public use, 4) FSD version updates, 5) Cybercab production SOP, 6) Optimus V3 updates. The bear case remains more anchored to valuation. While we are more positive than not on TSLA tech and progress, and believe there could be a strong milestone catalyst path, we do believe that many of these ventures/developments are already (more than) baked into the stock price.”

Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives.

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Disclosure: None.