Tesla Inc (NASDAQ:TSLA) shares rose 3.7% to $365 on Tuesday after UBS analysts shifted their stance on the stock, upgrading it to ‘Neutral’ while maintaining a $352 price target.
In a note to clients, UBS wrote that current share levels now “more evenly balance near-term demand challenges and investment period with the long-term physical AI opportunity.”
“We think TSLA stock trades more on sentiment, narrative and momentum than fundamentals,” they wrote.
They pointed to recent headwinds that have weighed on sentiment, including concerns about electric vehicle demand, an expected shortfall in first-quarter 2026 energy results, rising costs, increased capital expenditure requirements, and slower-than-expected progress in autonomous driving and robotics initiatives such as robo-taxi development and the Optimus humanoid robot program.
“Recent concerns over EV demand, higher capital spending requirements, and slow progress of robo-taxi and Optimus have weighed on the stock,” UBS wrote, while still maintaining a longer-term constructive view on Tesla’s positioning in what it calls “physical AI.”
Despite near-term caution, UBS continues to see Tesla as a long-term leader in autonomous systems and robotics. The analysts expect eventual progress in both robo-taxi deployment and Optimus development, noting continued potential in Tesla’s efforts to commercialize AI-driven physical systems.
At current prices, UBS estimates the market is valuing Tesla at roughly 150 times 2027 earnings per share, implying about $2.33 in expected EPS. This compares with UBS’s own estimate of $2.35 and consensus expectations of $2.47, suggesting what the firm describes as a relatively full valuation.
On Tesla’s core business segments, UBS forecast 2026 vehicle deliveries of around 1.6 million units, a slight year-on-year decline, with growth resuming at a compound annual rate of about 7% through 2030—below broader market expectations. The firm also noted potential near-term production starts for the Cybercab and Semi in limited volumes, along with the possibility of a smaller SUV that could broaden Tesla’s lineup.
In energy, UBS attributed a recent first-quarter 2026 shortfall to timing issues rather than structural weakness, while maintaining a long-term forecast of roughly 26% storage deployment growth annually through 2030. However, it flagged some uncertainty around lithium iron phosphate battery supply in 2026 to 2027, while noting Tesla’s ongoing investment in US capacity.
On autonomous driving and ride-hailing, UBS said expectations had risen following Tesla’s indication of robo-taxi expansion across nine cities by early 2026, though execution has appeared uneven, particularly in Austin.
The firm suggested Tesla could eventually scale lower-cost per-mile transport services and strengthen its position in the U.S. robo-taxi market. Improvements in consumer Full Self-Driving capabilities were also expected to support adoption.
Regarding robotics, UBS highlighted comments from Elon Musk suggesting Optimus Gen3 production could begin as early as summer, with higher-volume manufacturing targeted for 2027. However, UBS expressed skepticism about the timeline, noting potential delays and supply chain constraints, particularly given reliance on Chinese components, while still describing Optimus as a “large opportunity” and a key area where Tesla could lead US humanoid robotics.
The analysts also commented on Tesla’s planned “Terafab” initiative, which appears to be moving forward with limited detail beyond Intel’s involvement. While the project is expected to increase capital spending, UBS said Tesla’s scale and long-term growth ambitions justify experimentation with deeper vertical integration.
UBS concluded by keeping its $352 price target unchanged, noting that its 150x valuation multiple sits below Tesla’s one-year average and reflects confidence in long-term growth potential, even as near-term execution risks remain.