Tesla Inc. (TSLA) experienced significant stock volatility this week, with shares surging over 6% on Monday before declining 2.5% on Tuesday. The Monday rally was driven by CEO Elon Musk's detailed update on the company's AI chip development, where he announced that Tesla is nearing completion of its AI5 chip design and has started work on AI6, aiming to introduce a new chip into volume production every 12 months. Musk emphasized that Tesla expects to manufacture chips 'at higher volumes ultimately than all other AI chips combined,' highlighting the company's ambitions in autonomous driving and robotics.
Supporting the bullish sentiment, Melius Research analyst Rob Wertheimer released a report characterizing Tesla as a 'must own' stock, predicting that autonomy is approaching a tipping point that could drive one of the largest value redistributions in modern industrial history. Wertheimer estimated that the next five years 'will see hundreds of billions in value shift... to Tesla,' transforming a $7 trillion sector.
However, Tuesday's decline followed Mizuho Securities cutting its price target on Tesla from $485 to $475 while maintaining an Outperform rating. The firm pointed to headwinds in the US and China electric-vehicle markets, including potential subsidy reductions. In the US, which accounted for about 37% of Tesla's Q3 2025 sales, subsidies might be reduced, and in China (roughly 34% of sales), a possible 50% subsidy cut poses risks. Mizuho now forecasts 1.75 million deliveries in 2026 and 2.00 million in 2027, slightly below consensus expectations.
Adding to the pressure, Musk acknowledged that years of efforts to license Tesla's Full Self-Driving (FSD) system to other automakers have not materialized, with him stating, 'They don't want it!' on social media platform X. This marks a shift from a long-standing strategic aspiration, as talks stalled due to 'unworkable requirements' from automakers.
Despite near-term challenges, both Mizuho and Melius maintained longer-term bullish outlooks, citing autonomous-driving tailwinds, including FSD v14 adoption, upcoming robotaxi launches, and progress in humanoid robotics.
