Tesla’s stock reached a seven-month high following positive news and increased investor interest in large-cap tech stocks. The electric vehicle manufacturer experienced a surge in its stock price, climbing up to 4.3% to $230.83. This upward trajectory marked the ninth consecutive day of gains, constituting the longest winning streak since January 2021. Despite previous declines, Tesla shares have risen by 87% this year, rebounding from a significant plunge of 65% in the previous year.
The recent surge in Tesla’s stock can be attributed to the overall market’s enthusiasm for technology and growth stocks, driven by diminishing concerns about an impending recession. Ivana Delevska, the chief investment officer at SPEAR Invest, highlighted the significance of the recovery, stating that the positive movement in Tesla and other tech stocks is warranted after a downturn comparable to the dot-com bubble. Consequently, there is still potential for growth in many tech stocks due to the severity of the impact they endured.
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On Tuesday, Tesla’s Model 3 sedans qualified for the full U.S. tax credit under new criteria set by the Treasury Department. This change in qualification criteria eased concerns surrounding the demand for Tesla’s cars and electric vehicles in general. Additionally, Tesla’s recent announcement of a deal to provide Ford EVs access to Tesla Superchargers expanded the company’s reach and potential revenue sources, with the added benefit of utilizing government funds that promote charging infrastructure.
Although Tesla’s stock experienced a significant rally earlier in the year, it faced challenges in recent months. The company’s decision to aggressively reduce prices to address declining demand raised concerns about thinning profit margins. Moreover, investors were apprehensive about Tesla CEO Elon Musk being stretched too thin across his various high-profile ventures. However, the appointment of a new chief executive officer for Twitter could alleviate these concerns, providing reassurance to investors.
Despite the positive sentiment surrounding Tesla’s stock, some experts caution against trading it solely as an artificial intelligence (AI) play. While the market’s excitement around AI has boosted Tesla’s shares, skeptics argue that the company’s positioning in the AI sector remains uncertain. Morgan Stanley emphasized that Tesla is fundamentally an auto company, and the stock’s trajectory will be influenced by the supply and demand dynamics of electric cars in the coming year. Delevska echoed this sentiment, stating that generative AI could disrupt Tesla’s initial advantage in autonomous driving.
Source: APNews
