Investing.com -- Bank of America raised its price objective for Tesla (NASDAQ:TSLA) shares to $400 from $350 on Thursday, citing enhanced growth confidence following a visit to Tesla's Giga Texas factory in Austin.
The bank said the visit included meetings with investor relations, factory tours, and test drives.
"The trip gave us increased confidence that TSLA is well-positioned to grow in 2025+ with its core EV business (new vehicles will expand its
TAM) and launch of its robotaxi offering, and longer-term from its investments in Optimus," said the bank's analysts, reiterating their Buy rating on Tesla.
"TSLA showcased the capabilities of FSD, which were impressive and much improved from prior versions," stated BofA.
The bank said vehicles using FSD versions 12.5 and 13.2 navigated challenging roads autonomously, and Tesla projects interventions of once every 10,000 miles soon—a benchmark for its anticipated 2025 robotaxi launch.
Compared to Waymo's milestones, Tesla's rapid AI compute expansion using 50,000 H100 chips positions it strongly, according to the bank.
They note the Optimus robot program is also progressing. Tesla uses these robots for internal tasks, like sorting 4680 battery cells, with plans to scale production to 1,000 units by 2025.
Enhanced training and expanded compute resources are expected to accelerate Optimus's development, potentially reducing production costs significantly by 2026.
BofA anticipates Tesla's margin growth to transition from hardware-focused to software-driven, leveraging premium services like FSD and connectivity.
The analysts noted that Tesla's AI and robotics initiatives could even justify an equity raise to expand compute capacity, a move they believe investors would welcome.
BofA views Tesla as well-positioned for long-term growth, reinforcing optimism with an elevated valuation metric based on robust EV/EBITDA projections.