Tesla's Stock Surge and Elon Musk's Wartime Leadership Role

Tesla's Stock Surges as Elon Musk Prepares for an AI "War"

Tesla's stock experienced a significant upward movement on Monday, driven by the company's growing focus on artificial intelligence (AI) and its potential to reshape the future of transportation. Shares of the electric-vehicle maker reached as high as $425.70 before closing at $410.26, marking a 3.6% increase for the day. This rise was in line with broader market gains, as the S&P 500 and Dow Jones Industrial Average rose by 0.5% and 0.1%, respectively.

Despite the positive momentum, some analysts remain cautious. A downgrade from "Hold" to "Sell" by CFRA analyst Garrett Nelson suggested that the stock's valuation may be out of sync with its underlying fundamentals. Nelson maintained his $300 price target for Tesla shares, highlighting concerns about the company's long-term value proposition.

However, the recent rally has been notable, as it helped erase year-to-date losses and followed a 13% increase over the past week. The surge in stock price has sparked debate about the reasons behind it. Some technical traders have pointed to the momentum that pushed Tesla past its previous highs from the spring, indicating a shift in investor sentiment.

Strong EV Sales and Strategic Moves

Industry data providers reported strong EV sales in August, with buyers seemingly rushing to take advantage of the $7,500 federal EV purchase tax credit before it expires at the end of September. This increased demand has likely contributed to the recent stock performance.

In addition to this, Tesla has made progress in testing its self-driving taxi service in Las Vegas. The company launched a small AI-trained robo-taxi service in Austin, Texas, in June, signaling its commitment to advancing autonomous technology.

Wedbush analyst Dan Ives believes that AI is the key driver behind the current excitement surrounding Tesla. He noted that investors are beginning to look beyond short-term demand challenges and recognize Tesla’s potential to lead in the autonomous market. Ives highlighted the company's plan to scale its Robotaxi service to 30 to 35 cities in the U.S. over the next year.

AI as a Major Opportunity

While Tesla sold approximately 721,000 cars in the first half of 2025—a 13% decline compared to the same period last year—this drop in car sales does not diminish the importance of AI. Ives emphasized that the autonomous technology segment represents a $1 trillion opportunity for the company.

He described Elon Musk as being in a “wartime CEO” mode, driving the AI vision forward. This perspective aligns with the broader tech industry's race to develop advanced AI capabilities. The so-called “Magnificent Seven” stocks—comprising companies like OpenAI, Amazon, Alphabet, Microsoft, and Meta—are collectively valued at around $20 trillion. These firms are investing heavily in AI computing, with some focusing on self-driving technologies that overlap with Tesla's interests.

Musk's Role and Future Plans

Ives considers Musk to be one of the most important assets for Tesla during this critical phase. A new pay package worth up to $1 trillion, contingent on meeting performance goals, is expected to keep Musk at the company until 2030 and beyond.

Despite Ives’ bullish stance, the broader analyst community remains more cautious. The average analyst price target for Tesla is around $318 per share, with only 44% of analysts rating the stock as “Buy.” In comparison, the average Buy-rating ratio for S&P 500 stocks is about 55%.

As of Monday’s trading, Tesla’s stock had gained roughly 2% for the year and surged by about 81% over the past 12 months. This growth reflects both the company’s strategic moves and the broader market’s increasing interest in AI-driven innovation.