Tesla Stock Eyes $500 on AI, Robotaxi, and Wedbush Boost

Tesla’s journey has always been anything but ordinary. As July 2025 rolls in and a fresh quarterly earnings report looms, Tesla finds itself at a pivotal moment, one that could define its legacy for years to come. Wall Street sentiment has shifted sharply over the last few months. Still, leading analyst firm Wedbush refuses to blink, reiterating its “Outperform” rating and unveiling a sky-high $500 price target for Tesla stock. That’s nearly 52% above the company’s current price of $328.49, a bold call signaling Wedbush’s strong belief in Tesla’s long-term story, particularly around its budding AI and robotics ambitions.

Numbers and Trends

Tesla’s second quarter of 2025 was a mix of achievements and challenges, highlighting both the potential and the growing pains of a company that refuses to stand still. According to Alpha Spread, Tesla delivered 384,122 vehicles in Q2 of 2025, nearly matching consensus expectations and reflecting a business that has managed to remain resilient amid increasing competition and evolving consumer preferences. Yet, compared to the same period last year, the number of electric vehicle deliveries fell by 13.5%, even more than the 10% decline predicted by Wall Street.

Production numbers also sent mixed signals. The company built 410,244 vehicles, a figure that, while matching Q2 2024’s production, missed analyst consensus of 434,227. The inventory buildup hints at potential demand softness, an issue gripping all automakers as electric vehicle adoption cools worldwide.

Tesla’s response has been both aggressive and creative. A wave of incentives has rolled out across the United States to prop up sales ahead of the federal EV tax credit’s expiration. Alongside a $7,500 lease incentive, Tesla is offering reduced finance rates, complimentary upgrades on select inventory, and even a $1,000 discount for teachers, students, first responders, and military personnel. By offering these deals, Tesla hopes to keep its momentum as it heads into the next significant chapter.

Wedbush’s Faith in AI

So why is Wedbush so bullish, even as Tesla’s core business faces turbulence? The answer comes down to a new frontier i.e., artificial intelligence. According to Wedbush, Tesla’s competitive advantage now extends far beyond selling electric cars; it lies in building a multifaceted technology ecosystem. The firm is particularly enthusiastic about Tesla’s Robotaxi project, which has launched pilot operations in Austin, Texas, and is actively seeking expansion into other major cities. Wedbush analysts see the advent of Robotaxi and full self-driving (FSD) capabilities as potentially transformative not just for Tesla’s business model, but for urban mobility as a whole.

Their estimate of $1 trillion in value for Tesla’s autonomous and AI technologies over the next few years speaks to the dramatic upside they envision. If even a fraction of that comes to fruition, it could eclipse the value of Tesla’s core auto manufacturing business. Key to this thesis is also Tesla’s aggressive expansion into robotics, with the Optimus program representing a leap from manufacturing automation to commercial humanoid robots focused on industry, logistics, and eventually consumer applications. Should Optimus prove both scalable and commercially viable, Tesla would become the leader in a market still primarily in its infancy and potentially as disruptive as EVs themselves.

The Return of Musk

Part of what excites analysts like those at Wedbush isn’t just Tesla’s product roadmap, it’s the renewed sense of urgency from its visionary CEO. In 2024, Elon Musk was criticized for being distracted, often splitting his attention between Tesla, SpaceX, Neuralink, and his personal social media ventures.

Wedbush argues that Musk’s re-engagement is already visible. The company’s quick pivot towards AI-first messaging, accelerated Robotaxi trials, and ongoing negotiations over a possible investment in xAI all point to an executive locked-in on maximizing Tesla’s value. Wedbush projects that a strategic alliance or sizable investment in xAI could further anchor Tesla’s leadership in next-generation AI, provided shareholders vote to approve such a transaction later this year.

Can Tesla Deliver?

Still, none of this is guaranteed. Tesla’s quarterly fundamentals are under pressure. Despite the optimism around the AI strategy, the latest vehicle production and delivery numbers imply more challenges ahead for the legacy business. Global demand for electric cars has cooled; fierce new competition from China’s BYD and established German, Korean, and Japanese automakers has intensified pricing battles in all significant markets.

Amid these headwinds, Tesla is trying to buy time. Alongside its discounts and incentives, the company has shuffled top leadership, naming IT executive Raj Jegannathan as the new head of sales for North America, a significant move aimed at revitalizing lagging demand just as tax credit uncertainty looms over U.S. buyers.

Wall Street is watching these developments closely. For all of Wedbush’s optimism, other analysts urge caution, pointing out that Tesla’s elevated valuation trading at a forward P/E ratio above 170 implies nearly flawless execution going forward. Meanwhile, free cash flow remains under pressure, and the company’s margins have squeezed as pricing wars become the “new normal” in the global EV sector.

The Autonomous Dream: Hype or Reality?

Yet, underneath the financial headlines lies the core of Tesla’s next act. If AI and autonomy deliver as Wedbush expects, Tesla will not just recover from its current slowdown it could redefine what the company is altogether. Robotaxi, FSD licensing, and Optimus commercial revenues are yet to contribute to the bottom line meaningfully. But if Tesla can deliver actual, regulatory-approved, and profitable autonomous driving within the next two to three years, the value creation could be immense. Potential revenue models range from per-mile fees to recurring software subscriptions, partnership deals, and even licensing agreements with rival automakers looking to leapfrog their development efforts.

Wedbush’s trillion-dollar valuation call on Tesla’s AI business draws parallels with technology giants like Microsoft, Nvidia, and Alphabet, each of which has built market-defining platforms. Whether Tesla’s platform ambitions match these giants in scope or profit remains to be seen.

The Battle for Global Leadership

Tesla’s international strategy also remains under the microscope. Demand in China, Tesla’s largest market outside the United States, is showing early signs of stabilization after months of declines. The company’s Shanghai Gigafactory continues to play a pivotal role in its global supply chain. However, local rivals and shifting regulatory frameworks make this a battleground for future success.

Back home, the rush to offer new incentives might blow sales in the short term, but it raises questions about sustainability. If discounts become permanent features, will Tesla undercut its premium branding and its margins? The evolution of U.S. federal policy on EV credits will play an outsized role in shaping the following year’s sales.

Tesla’s recent executive shake-up comes as the company attempts to streamline sales operations in the face of metallic headwinds. With Raj Jegannathan stepping in as top sales executive for North America, expectations are high for a swift turnaround and a modernized approach to customer engagement.

This change follows the recent departure of Troy Jones, whose exit underscores the pressure Tesla’s sales wing is under. As Musk doubles down on AI, having a strong frontline sales leader with technical expertise is more important than ever for driving adoption of new products especially as Robotaxi and Optimus (the humanoid robot, is intended for various tasks, including manufacturing assistance, and is planned for mass production) enters the market.

Risks and Opportunities

Looking ahead, Tesla faces a critical test. Its future valuation, and its claim to technological leadership, depend on whether it can pivot from splashy announcements to meaningful scale and profitability in AI and robotics. Investors want more than just vision; they want milestones, regulatory progress, and signs that these next-gen initiatives will offset softening auto margins and sales cycles.

Success would justify Wedbush’s bold $500 target and transform Tesla from a car company to a diversified technology leader. Shortfalls, however, may see the company’s premium valuation come under renewed scrutiny particularly if the core auto business continues to stumble.

What’s Next?

Tesla today is a company racing against time balancing the relentless demands of its established electric vehicle business with the high-stakes potential of AI and robotics. Wedbush’s bullish bet centers on the belief that Tesla, powered by Musk’s renewed leadership and swift innovation, is best positioned to win the next era of transportation and automation. Their $1 trillion autonomy estimate may seem ambitious, but in the history of technology, new platforms often start with outsize bets.

The markets will get their following clues soon, with Tesla’s earnings call expected to offer updates on Robotaxi, Optimus, and possible investment in xAI. It’s a crossroads not only for Tesla, but for the future of AI in the real world.

With bold ambitions, persistent risks, and a world rapidly waking up to the promise and peril of artificial intelligence, the next chapter for Tesla promises to be as unpredictable as it is exciting. For now, analysts and investors can only watch, wait, and wonder.