Rivian Automotive Inc (NASDAQ:RIVN) saw its 12-month price target raised to $25 from $16 by Wedbush, which maintained an “Outperform” rating on the electric vehicle maker.
Shares of Rivian traded up about 9.5% at $22 on Friday morning.
The analysts wrote that 2026 is expected to be a “significant year” for Rivian, with the launch of its R2 model in the first half of the year anticipated to boost deliveries and support growth in the company’s autonomy roadmap.
“We believe that 2026 represents a ‘prove-me’ year with its R2 fleet providing a significant opportunity to drive demand,” the analysts wrote, noting the R2 SUV addresses a gap in the US EV market for lower-cost vehicles.
Wedbush highlighted that Rivian is also focusing on improving its cost structure and margin profile. “From a gross margin perspective, RIVN expects to see improving gross margin heading into next year as it looks to adjust its sourcing and pricing strategies to navigate increases in raw material costs,” the analysts wrote.
The firm noted that Rivian’s software business, which generates nearly $500 million per quarter, contributes roughly 25% of total revenues and provides additional upside to gross margins.
Rivian is pursuing further vertical integration in its autonomous vehicle efforts. During its AI day, the company unveiled plans for a new autonomy subscription, Autonomy+, and a proprietary AI chip to replace Nvidia GPUs in future vehicles.
Wedbush wrote that these moves are expected to enhance software capabilities while lowering manufacturing costs. “This new chip is also expected to save hundreds of dollars per vehicle on a COGS basis as the company looks to build more parts in-house for improved unit economics,” the analysts wrote.
The firm concluded that Rivian’s strategy of expanding revenue streams beyond vehicle deliveries positions the company to capitalize on autonomous driving demand while optimizing its overall cost structure.