Tesla’s (NASDAQ:TSLA) stock continues to surge, as investors continue to price in a much better competitive environment for the EV maker relative to its peers. Impressively, Tesla stock is up around 45% on the year, but 55% over the past month alone. That means that the stock has not only made up its earlier losses on a year-to-date basis over the past month, but is now pushing toward a fresh all-time high.
I’m not sure if Tesla will have enough momentum to hit a new all-time high this year. But with the stock now re-joining the exclusive $1 trillion market cap club, there’s no shortage of investors who are pricing in another surge toward the next key psychological threshold on the horizon – a $2 trillion valuation.
Given the amount of interest around this company, and the sheer amount of volume when it comes to options activity for this stock, I wouldn’t be surprised to see some continuation of this recent move bleed into the coming year. Let’s dive into the bull case behind why a $2 trillion valuation next year could be in the cards for many investors’ favorite car company.
Key Points About This Article:
- Tesla stock has been skyrocketing following the re-election of president Donald Trump to the White House.
- The company’s recent momentum has been impressive, but the question is whether the next key psychological threshold of $2 trillion is achievable over the next year.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.
Playing the Trump Card
Electric vehicle makers such as Tesla may be impacted by a new Trump presidency in different ways. The potential removal of tax incentives for new EV purchases will likely impact the sector disparately, with Tesla’s cost advantage over its peers and its already-profitable operating business insulating the company from this key headwinds.
The general view in the market right now is that Tesla is the cleanest shirt in the pile. And if competitors are forced out of business due to their vehicles becoming too expensive for the average car buyer, Tesla’s market share advantage could grow in the U.S. This potential catalyst, alongside Trump’s likely additional tariffs against China, could essentially turn the U.S. market into a monopoly of sorts for Tesla over time, which some believe could lead to much higher future profits as previous Tesla owners trade in their used vehicles for newer models.
We’ll see. But it’s clear that Donald Trump’s relationship with Tesla CEO Elon Musk is generally perceived to be a good thing. And whether Elon Musk is able to achieve the rather incredible $2 trillion savings target he’s set out to hit with his so-called “Department of Government Efficiency (DOGE)” or not, reduced tax credits and increased tariffs could be a boon for business when it comes to Tesla.
Wall Street Believes in Tesla’s Potential
The important thing to note about Tesla’s recent move is that it’s not just retail investors who are piling onto one side of the boat. Rather, Wall Street analysts have grown increasingly bullish on the EV maker of late.
Amid the stock’s impressive rise, Bank of America analyst John Murphy maintained his buy rating on the company while raising his price target to $350 for Tesla stock. At the time of writing, this price target increase amounts to a bump of less than 5%, though this price target did reflect roughly 18% upside at the time the call was issued. That’s just how fast Tesla stock is moving right now.
Tesla perma-bull Dan Ives also maintained a buy rating on the stock and a $300 target, though I’d expect that target to get a massive boost on his next note to clients. Both analysts appear to be bullish on the company’s positioning in the market with the changing tax incentive and tariff structure, but both also have pointed to the potential for the Trump administration to be much more friendly toward Tesla’s future “Full Self Driving” (FSD) applications to regulators over the coming year as a key reason to own this stock.
Not to be outdone, Cathie Wood and her team recently set a rather incredible (and partly unbelievable) $2,600 price target on Tesla stock based on the Cybercab’s success, implying upside of more than 700% from current levels. I think this price target is crazy, but crazier things have happened. We’ll see.
A $2 Trillion Could Be Only the Beginning
If we’ve learned anything about Tesla and its investor base, it’s that there are more Cathie Wood-like investors out there than bears. That sort of eternal optimism around the ability of Tesla (and Elon Musk) to continue to find a way to create outsized shareholder capital with the resources they have available is what makes this stock and this story so incredible to watch.
Given the company’s recent momentum, and Musk’s positioning in aligning himself closely to Donald Trump, there are key fundamental political drivers behind this stock which could buoy Tesla for some time to come. If everything lines up the way many expect, a $2 trillion valuation could certainly be in the cards next year.
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