BofA warns Fed risks policy mistake with early rate cuts
Investing.com -- Wolfe Research said the investment case for Tesla (NASDAQ:TSLA) is shifting increasingly toward its artificial intelligence and autonomy ambitions, despite a mixed near-term outlook for the core auto business.
“This name trades more around the narrative than the numbers,” analysts wrote, adding: “Confidence in Tesla’s AI opportunities remains the most important driver of the stock.”
Wolfe highlighted upcoming catalysts around Full Self-Driving (FSD) and robotaxis, including expansion into new markets, potential FSD approval in China and Europe, and hands-free functionality in parts of the U.S.
The firm also noted that Tesla’s Optimus humanoid robot is expected to enter scaled production in 2026, with management targeting 1 million units per year by 2030.
However, near-term fundamentals remain under pressure. Wolfe’s updated 2025 and 2026 earnings per share forecasts are $1.62 and $1.67, respectively, well below the consensus estimates of $1.76 and $2.53.
The firm warned of a “challenging” setup over the next 18 months, citing risks to Model 3 and Model Y demand once U.S. clean vehicle tax credits expire in late 2025.
Tesla’s Energy segment, by contrast, was described as a bright spot. “We expect Energy revs to double in 2026 vs 2024 (to ~$18bn vs $9.2bn), with strong GMs,” Wolfe said, adding that Tesla’s scale and integration expertise position it well as global battery storage demand continues to exceed supply.
“Success in Energy is critical in the medium term to avoid notable cash burn,” the analysts warned, especially as regulatory credit sales fade and investments in AI ramp up.