Tesla shares declined approximately 5% to $397.42 by midday Friday, even as J.P. Morgan upgraded the electric vehicle maker's stock and more than tripled its price target to $475. The drop came amid a broader technology sector selloff triggered by stronger-than-expected U.S. jobs data, which pushed bond yields higher and dampened investor appetite for growth stocks.
The mixed market reaction to Tesla highlights the shifting dynamics in how Wall Street values the company. Analysts and investors are increasingly looking beyond traditional metrics like car sales and profit margins, focusing instead on the potential of Tesla's autonomous driving, robotics, and artificial intelligence initiatives. However, lingering concerns about interest rates continue to weigh on long-duration growth stocks.
J.P. Morgan raised its rating on Tesla to "neutral" from "underweight," with analysts led by Rajat Gupta noting that the company's valuation is increasingly driven by its autonomous driving and robotics prospects rather than short-term earnings. The firm emphasized that Tesla's in-house integration of hardware and software remains "still somewhat under-appreciated and misunderstood." The price target was boosted to $475 from $145.
J.P. Morgan's analysts projected that Tesla's earnings per share could rise to approximately $7.50 by 2030, up from an estimated $1.95 in 2026. Revenue is expected to more than double to roughly $203 billion over the same period. A price target represents an analyst's estimate of where a stock might trade over a specific timeframe, not a guarantee of future performance.
The broader market decline followed the release of stronger-than-expected nonfarm payrolls data for May, which came in at 172,000 jobs versus the Reuters poll forecast of 85,000. "People are pricing in 100% probability of a Fed hike later this year," said Charlie Ripley, senior investment strategist at Allianz Investment Management. He added that the rate move is prompting investors to "take chips off the table."
Tesla's autonomous driving ambitions remain a key focus. On Wednesday, the company announced it would deploy unsupervised robotaxis in the Austin metro area, building on a service it has been operating there for nearly a year. However, regulatory and safety risks persist. In its latest quarterly filing, Tesla warned that regulators including the U.S. auto safety agency, the SEC, and the Justice Department are actively seeking information on vehicle features, incidents, Autopilot, Full Self-Driving Capability, and Robotaxi. The company cautioned that any enforcement action could have a material adverse impact.
Competition in the robotaxi space is intensifying. Uber has invested nearly $500 million in self-driving firm Nuro, as reported by Reuters this week, joining rivals such as Waymo, Amazon's Zoox, and others in the race. Waymo currently operates over 250 vehicles in the Austin area, while Tesla has about 50 vehicles in the city fleet, according to Austin officials. The key difference lies in strategy: Waymo focuses on mapped zones and cautious rollouts, while Tesla aims to push its Full Self-Driving software to cover a broader geographic area.
Tesla's traditional automotive business remains a critical funding source for its AI and robotics ambitions. In April, the company reported over 358,000 vehicle deliveries for the first quarter and deployed 8.8 gigawatt hours of energy storage. These numbers continue to underpin the company's financial capacity to pursue its long-term vision.
Friday's trading session offered a mixed outcome for Tesla investors. Bulls took comfort in a major brokerage upgrade that reinforced Tesla's positioning in the AI and robotics arena. Sellers, meanwhile, saw the stock decline amid a strong macroeconomic backdrop and ongoing skepticism about the scalability and profitability of driverless technology.
