Bank of America has reissued a 'Buy' rating on Tesla Inc. (TSLA), lifting its price target to $250 per share, citing improved vehicle production efficiency and growing AI integration in its vehicle platforms. The move marks a strategic shift from prior caution and reflects renewed confidence in Tesla’s long-term trajectory.
- Bank of America upgraded TSLA to 'Buy' with a $250 price target
- Production cost reductions of 12% YoY at key Gigafactories
- Dojo AI platform processing 300 petabytes of data monthly
- TSLA trading at 42x forward P/E, above S&P 500 average
- VIX at 14.8, indicating stable market sentiment
- CL=F oil price at $78.40 per barrel, no major macro headwinds
Bank of America analysts have upgraded Tesla’s stock to 'Buy' and assigned a $250 price target, a significant increase from their previous $190 estimate. The firm cited consistent improvements in factory output, particularly at the Gigafactory in Texas and Berlin, which have reduced unit production costs by approximately 12% year-over-year. These gains, coupled with accelerated deployment of the next-generation Full Self-Driving (FSD) software, are seen as key drivers of margin expansion and revenue growth. The upgrade comes amid broader market skepticism over Tesla’s valuation, with the stock trading at a forward P/E of 42 as of March 2026—well above the S&P 500’s 18 average. Yet, analysts point to Tesla’s expanding role in the AI-driven automotive space, where its in-house Dojo supercomputing platform is now processing over 300 petabytes of training data monthly. This infrastructure is expected to support faster development cycles for autonomous features, potentially differentiating Tesla from legacy automakers. Despite the optimism, market reaction has been muted, with TSLA rising only 1.3% in early trading on March 7, 2026, underperforming the broader tech sector. The S&P 500 gained 0.7%, while the CBOE Volatility Index (VIX) remained stable at 14.8, suggesting limited investor anxiety. Oil prices, tracked via CL=F, edged up 0.6% to $78.40 per barrel, indicating no immediate macroeconomic headwinds for the electric vehicle (EV) sector. The upgrade primarily affects institutional investors and long-term analysts assessing Tesla’s growth runway. However, with Tesla’s stock still down 18% from its 2023 peak, the Bank of America call adds weight to a growing narrative that the stock may be undervalued relative to its technological ambitions. The firm emphasized that competitive threats from Chinese EV manufacturers and slowing U.S. EV adoption remain risks, but sees Tesla’s vertical integration and software moat as durable advantages.