- Morgan Stanley maintains Overweight rating and $410 price target on Tesla, citing 39% upside potential.
- Analyst Adam Jonas highlights Tesla's strengths in AI, robotics, and energy beyond traditional EVs.
- Recent 15% stock drop tied to Musk-Trump feud seen as short-term volatility, not structural risk.
Standing Firm on Tesla's Long-Term Value
Morgan Stanley is doubling down on its bullish Tesla stance despite recent political headwinds and stock turbulence. Analyst Adam Jonas reaffirmed an Overweight rating and $410 price target - representing nearly 40% upside from last week's close - arguing the market underestimates Tesla's technological moat beyond electric vehicles.
"There's no structural change to Tesla's growth trajectory," Jonas noted in the report, pointing to the company's unique positioning in physical AI, autonomous systems, and energy infrastructure. The call comes after Tesla shares tumbled 15% following CEO Elon Musk's public clash with former President Donald Trump over tax policy and subsequent exit from a White House advisory role.
Beyond the EV Narrative
Morgan Stanley's thesis centers on Tesla evolving into a diversified tech powerhouse. "No other company matches Tesla's positioning in data, AI, robotics and supporting networks," Jonas wrote, specifically citing:
- Autonomous vehicle development
- Optimus robotics platform
- Energy storage solutions
- Manufacturing infrastructure
The firm downplayed concerns about Trump's proposed EV tax credit phase-out, calling the impact "not material" to long-term valuation. While acknowledging rising competition from Chinese manufacturers like BYD, analysts believe Tesla's technology pipeline provides durable advantages.
Political Drama as Noise
Market watchers had grown concerned that Musk's political stance could alienate parts of Tesla's customer base. The recent feud began when Musk criticized provisions in Trump's new tax bill, leading to his departure from a White House advisory council in late May.
"We see this as short-term noise," said a Morgan Stanley associate who asked not to be named discussing client strategy. The note emphasizes Tesla's fundamentals remain intact, with potential synergies across Musk's companies including SpaceX integration and AI collaborations between xAI and Optimus.
Tesla remains Morgan Stanley's top U.S. auto pick, with Jonas advising investors to focus on the company's technology moat rather than quarterly delivery numbers or political controversies. The firm sees particular value in Tesla's energy storage business and manufacturing tech stack as underappreciated by markets.