Elon Musk Got Tesla’s Stock Back to Record Highs. Can Its AI-Powered ‘March’ Continue?

Elon Musk says the future is autonomous. Investors appear to be on board.

Tesla (TSLA) stock rose 3% on Tuesday to close at $489.88, its first record high of the year. Shares got a boost this week after Musk said Tesla had begun testing unoccupied self-driving cars in Austin, Texas, a major step toward realizing Musk’s vision of operating a ride-hailing network of autonomous vehicles. Tuesday’s gains put the stock up 21% for the year, capping off its rebound from a tumultuous first half. (The shares fell today amid a broader pullback.)

Tesla stock started the year on a high note. Elon Musk was vital in returning Donald Trump to the White House, and investors were betting his close ties with the president-elect would benefit Tesla despite Trump’s opposition to clean energy policies aimed at boosting demand for electric vehicles.

Then Trump was inaugurated—and everything changed.

Tesla shares plunged in February and March as Musk’s work with the Trump administration and political advocacy abroad sparked consumer backlash. Investors, meanwhile, worried Musk’s government work was distracting him from leading Tesla. All the while, Trump pursued tariff policies that whacked the stock market. By mid-April, the stock had lost more than half of its value since a December 2024 record high.

The stock regained momentum once Musk stepped back from his work with the White House. And despite some hiccups—including a public falling-out between Musk and Trump in June—shares have been trending higher ever since.

Tesla’s ambition to become a leading AI and robotics company has been vital to its turnaround, helping it benefit from investor enthusiasm for artificial intelligence that has lifted a range of stocks this year. Tesla in late 2024 unveiled its Robovan and Cybercab at an event laying out Musk’s vision for the company’s AI-driven future. He said fully autonomous Teslas would be operating in Texas and California by the end of 2025, and showcased Tesla’s humanoid robot, Optimus, which he predicted would be “the biggest product ever.”

Tesla began piloting its robotaxi service in Austin in June, and expanded to the San Francisco area the following month. Musk is aiming to enter several other major metros, including Phoenix and Las Vegas, next year. 

Optimism about Tesla’s autonomous technology has offset continued weakness in its EV business. Sales jumped to a record in the most recent quarter as Americans rushed to buy EVs ahead of the expiration of federal tax credits. Still, Tesla is expected to deliver far fewer cars this year than in 2024 after a sharp drop in the first and second quarters.

Investors worried about Musk’s commitment to Tesla—he also leads space exploration company SpaceX and AI start-up xAI, among other things—got reassurances last month when shareholders approved a compensation plan valued at up to $1 trillion.

Wedbush analyst and noted Tesla bull Dan Ives predicted in a note on Monday that 2026 will be a “game changer” for the company. Ives expects Tesla to begin volume production of Cybercabs by May and accelerate its robotaxi rollout with the help of federal regulators. “We believe the march to an AI driven valuation for TSLA over the next 6-9 months has now begun,” wrote Ives, who thinks Tesla stock could rise more than 60% to $800 by the end of next year.

Most on Wall Street are more cautious. The mean price target of analysts tracked by Visible Alpha is below $400, suggesting a retreat.