Despite the turbulent nature of Tesla's stock performance, TD Cowen believes it remains one of the most compelling investments for those looking to capitalize on the electric vehicle (EV) market. The firm has upgraded Tesla's stock rating from hold to buy, with a price target that suggests substantial growth potential. Analyst Itay Michaeli argues that Tesla should not be evaluated as a traditional automaker due to its unique positioning in various mobility sectors and related markets. This perspective is particularly relevant given Tesla's leadership in autonomous vehicle (AV) technology, especially in less densely populated areas where AV deployment may be more feasible. However, the company faces challenges such as supply chain risks and negative sentiment surrounding CEO Elon Musk, which have contributed to a significant decline in share prices this year.
In a recent note, TD Cowen emphasized that Tesla stands out among its peers, particularly in the emerging autonomous vehicle sector. The firm highlighted that Tesla's fleet concentration in less dense regions positions it well for early adoption of AV technologies. These areas offer opportunities for new business models and existing rideshare revenue streams. According to Michaeli, Tesla's leadership in this space is often overlooked, yet it presents considerable untapped potential. Furthermore, the analyst noted that Tesla's competitive edge extends beyond just EV production, encompassing innovations in mobility and adjacent markets. This broader scope sets Tesla apart from other automakers and justifies its higher valuation.
The current market environment for Tesla has been challenging, with shares dropping nearly 35% in 2025, including a steep decline of 28% in February alone. Factors contributing to this downturn include a reported yearly decline in revenue during the fourth-quarter earnings release and concerns over supply chain disruptions due to tariffs. Additionally, rising negative sentiment around CEO Elon Musk has played a significant role in the stock's struggles. Despite these challenges, analysts remain divided on Tesla's prospects. Of the 54 analysts covering the stock, 26 recommend buying or strongly buying, while 17 maintain a hold rating, and 12 suggest underperforming or selling.
Amidst the mixed opinions, TD Cowen also identified General Motors as a top pick, praising its innovative approach and strong financial position. The firm highlighted GM's majority earnings from its truck franchise, unique setup for electric vehicle accretion, ample growth levers, and strong execution capabilities. Moreover, GM's exploration into autonomous vehicles and artificial intelligence adds another layer of potential for future growth. In contrast, Tesla continues to face volatility, but its strategic positioning in key markets and technological advancements suggest a promising outlook despite current setbacks.