Wedbush Securities predicts Tesla Inc.‘s TSLA artificial intelligence initiatives could see major gains under a Trump presidency, despite potential headwinds for the broader electric vehicle sector.
What Happened: Dan Ives, a leading analyst at Wedbush Securities, projects that Donald Trump‘s return to the White House could significantly boost Tesla’s AI ambitions, potentially unlocking “$1 trillion of incremental AI valuation” for the electric vehicle maker over the coming years.
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However, the outlook for the broader EV industry appears mixed. Tesla CEO Elon Musk, who actively campaigned for Trump, has acknowledged that the incoming administration would likely eliminate EV subsidies and tax credits, as discussed during Tesla’s second-quarter earnings call.
“We believe Trump in the White House changes the landscape for Elon Musk and Tesla,” Ives said during an appearance on CNBC’s Squawk Street. The analyst characterized Musk’s alignment with Trump as a “major strategic bet” that could prove “very bullish for Tesla’s AI/autonomous story.”
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Why It Matters: The firm projects Tesla’s stock could see a $40-$50 price increase under a Trump presidency, representing a potential upside of 16% to 20% based on current trading levels. Analysts attribute this positive outlook to Tesla’s established market position and manufacturing capabilities.
“We believe a Trump presidency would be an overall negative for the EV industry as likely the EV rebates/tax incentives get pulled,” Wedbush analysts wrote on Tuesday. “However, for Tesla, we see this as a potential positive with some caveats.”
Beyond Tesla, Ives anticipates significant AI initiatives that could benefit other major tech players, including Microsoft Corp., Amazon.com Inc., Alphabet Inc.‘s Google, and Palantir Technologies Inc.
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The analysis comes as Trump prepares to assume office as the 47th president of the United States, marking a period of potential transformation for both the technology and automotive sectors.
Price Action: Tesla Inc. showcased a standout performance on Wednesday, closing up 14.75% at $288.53, marking a significant single-day gain that brought its year-to-date rise to 16.15%.
In contrast, key U.S.-based EV competitors struggled considerably, including Rivian Automotive Inc. RIVN and Nio Inc. NIO. Rivian dropped 8.31% to $9.71, extending its challenging 2024 trajectory with a year-to-date decline of 53.98%. Nio fell 5.30% to $5.00, with a year-to-date slide of 40.62%.
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Chinese EV maker Xpeng Inc. XPEV and leading Chinese hybrid-electric giant BYD Company BYDDY also experienced losses, albeit to a lesser extent. Xpeng closed down 3.98% at $12.30, while BYD dropped 4.53% to $71.93, though BYD remains a strong performer overall, up 33.95% year-to-date.
On the ETF side, Tesla’s momentum mirrored that of Simplify Volt RoboCar Disruption and Tech ETF VCAR, which surged 18.48% on Tuesday. However, the broader EV sector showed mixed results, with the SPDR S&P Kensho Smart Mobility ETF HAIL increasing by only 1.23%, according to data from Benzinga Pro.
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