Chinese chip stocks jump as Beijing reportedly warns against Nvidia’s H20
On Friday, Erste Group downgraded Tesla (NASDAQ:TSLA) stock from Hold to Sell, citing concerns over the automaker’s product lineup and competition in the Chinese market. Analysts at Erste Group noted that Tesla’s range of electric vehicles appears outdated, particularly in China, where local manufacturers are introducing more affordable and technologically advanced models. According to InvestingPro data, Tesla’s stock has already declined 34.76% year-to-date, with technical indicators suggesting the stock is in oversold territory.
Tesla’s average selling price in the fourth quarter was reported at $39,630, marking a 9% decline year-over-year. The analysts highlighted Tesla’s high valuation, with a current price-to-earnings ratio of 117.89x and weak gross profit margins of 17.86%, as points of concern. Additionally, Tesla’s sales guidance for 2025 has been revised from an anticipated increase of 20-30% to an unspecified level of "growth." For deeper insights into Tesla’s valuation metrics and financial health, InvestingPro offers exclusive analysis through its comprehensive Pro Research Report, available for over 1,400 US stocks.
The first sales figures for 2025, including those from the Chinese market, indicate a significant drop in sales volume. Erste Group’s commentary pointed out that the current valuation of Tesla does not align with the observed data. The potential success of Tesla’s self-driving robotaxis, referred to as Cybercab, which is expected to launch in the USA in 2026, is believed to already be factored into the stock price.
The downgrade comes as Tesla faces increasing pressure in China, a key market for electric vehicles, where domestic brands are rapidly gaining traction with consumers. The competitive landscape is shifting, and Tesla’s performance in this market is closely watched by investors and industry analysts alike.
Erste Group’s revised outlook for Tesla reflects broader concerns about the company’s ability to maintain its market position and growth trajectory in the face of heightened competition and shifting consumer preferences. The downgrade to a Sell rating suggests that the analysts see more challenges ahead for Tesla as it navigates a changing automotive landscape.
In other recent news, Broadcom (NASDAQ:AVGO) reported first-quarter results with an adjusted earnings per share of $1.60, surpassing the Bloomberg Consensus estimate of $1.50. The company’s adjusted net revenue reached $14.92 billion, exceeding the expected $14.61 billion. Broadcom forecasts a second-quarter revenue of approximately $14.9 billion, higher than the projected $14.59 billion. In related developments, Nvidia (NASDAQ:NVDA) experienced premarket gains following Broadcom’s optimistic forecast about AI chip production, which also positively impacted other chip stocks like Marvell (NASDAQ:MRVL) and Micron (NASDAQ:MU).
Meanwhile, TD Cowen has raised its rating on Tesla stock to Buy, setting a price target of $388.00. The firm cited potential catalysts such as new vehicle launches and advancements in autonomous technology. Additionally, Tesla has signed a lease to open its first showroom in Mumbai, indicating a renewed strategy to sell imported cars in India after previous plans were shelved. This comes amid ongoing discussions between the United States and India regarding the reduction of auto import tariffs, which could benefit Tesla’s market entry.
In a separate development, five Democratic senators have urged the Justice Department to investigate potential ethical violations involving Elon Musk and the social media platform X. The senators are concerned about Musk’s influence on advertisers and have requested a thorough investigation to ensure compliance with ethics laws.
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