Tesla shares got smacked hard throughout Friday, sliding fast before clawing back slightly at the closing bell as the broader market recovered from Thursday’s dump.
But make no mistake, the stock is still down around 9% since Elon Musk locked in that $1 trillion compensation package, which passed earlier this month. The bounce today doesn’t undo the pain from the rest of the week. As it stands, Tesla is sitting 7% lower since Monday, and it just broke through the $400 level, a price many on Wall Street considered a floor.
Yesterday, the stock dropped to levels we haven’t seen since September. But it’s not just a Tesla thing, there’s just so much pressure on tech names. One big trigger: the odds of a December interest rate cut are falling fast, and that’s killing momentum for risky stocks. With the Fed unlikely to lower rates soon, money is flowing out of Big Tech, and Tesla is right in the blast zone.
AI worries push investors out of Tesla
On top of rate fears, there’s something else chewing at Tesla’s stock: concerns that the AI hype cycle might be cooling off. When capital starts shifting out of high-valuation names into safer territory, companies like Tesla, which trade heavily on future innovation, get dumped. That shift is fueling the exodus.
Still, not everyone’s running for the hills. Analysts like Adam Jonas at Morgan Stanley are zooming out to the long-term view.
In his list of “way too early” robot predictions for 2026, Jonas said Tesla will likely remove the safety driver from its Robotaxi trials in Texas and at least one other U.S. state.
He wrote, “2026 is the year when robotaxis cross over from science fiction to reality with consumers, investors.”
Jonas is betting on Tesla pushing ahead in autonomous driving and robotics. He thinks Musk’s other project, xAI, will become more important to Tesla’s future. He predicts xAI will help the company scale its humanoid Optimus robot program.
“A Tesla robot plant is the ‘mother’ of the next generation of robots,” Jonas wrote. He sees the connection between Tesla and xAI as a big deal going forward, especially as xAI ramps up its computing power and “truth-seeking” tools.
At Tesla’s recent shareholder meeting, Musk confirmed that Austin’s Robotaxi safety drivers would be removed by year-end. He also listed Miami, Dallas, Phoenix, and Las Vegas as cities where Robotaxi testing will expand soon.
As for the robots? Tesla said it will build a 1-million-unit Optimus production line at its Fremont, California factory. That’s just the start—Musk wants to scale to 10 million units at Giga Texas. Right now, Optimus is still in pilot production at Fremont.
Jonas has an Overweight rating on the stock, with a $410 near-term target and a wild “bull case” of $800. Not to be outdone, Dan Ives of Wedbush also chimed in from the Yahoo Finance Invest event in New York.
“In my opinion, it’s going to be the most important chapter ever in Tesla’s story,” he said, talking about the company’s AI plans.
Ives views the recent approval of Musk’s pay package as a “bright green light” for Tesla to go full steam ahead with autonomous driving and robotics. He slapped an Outperform rating on the stock, along with a Street-high $600 price target.
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