Key takeaway: UBS raised its price target on Tesla Inc. to $352.00 from $307.00 while retaining a Sell rating, pointing to the automaker’s larger capital expenditure plans to finance AI-focused initiatives. The new target remains substantially below Tesla’s trading level of $431.46, underscoring UBS’s concerns about valuation.
Valuation and balance-sheet context
UBS cited valuation metrics that, in its view, justify caution. InvestingPro data referenced by the bank shows Tesla trading at a price-to-earnings ratio near 300 and an EV/EBITDA multiple of about 130. Those multiples form part of UBS’s rationale for keeping the stock on Sell despite increasing its single-point target.
At the same time, UBS and InvestingPro data highlight that Tesla’s balance sheet carries more cash than debt and that the company generated $6.8 billion in levered free cash flow over the last twelve months. UBS’s analysis balances that liquidity and recent cash generation against the company’s planned rise in spending.
Capex increase and cash burn expectations
UBS noted Tesla plans to roughly double capital expenditures to about $20 billion in 2026, compared with an average of $10 billion over the past three years and above a previously indicated $11 billion. The bank estimates this elevated investment pace will produce about $6 billion of cash burn in 2026, a figure that excludes Tesla’s roughly $2 billion investment in xAI.
While the company shows cash strength and recent positive levered free cash flow, UBS’s projection of near-term cash outflows tied to scaling AI and robotics efforts is a central driver of its more cautious stance.
AI projects, timing and revenue prospects
UBS acknowledged Tesla’s technical capabilities in autonomous driving and humanoid robotics but emphasized the heightened risk profile of the investment as the company moves from primarily automotive manufacturing toward AI-led businesses. The bank observed that Tesla’s Robotaxi initiative could expand to 12 major cities by year-end, but warned those operations will not be fully scaled and are unlikely to produce material cash flows in the near term.
On the Optimus humanoid robot program, UBS reiterated timing uncertainty. The firm cited CEO comments that development will follow a "stretched-out S-curve," indicating a prolonged, uneven path to commercialization. UBS also referenced Musk’s remarks about potential future projects, including a semi "Terra-fab" that could carry an initial price tag of $30 billion and a solar factory.
Automotive business and margin dynamics
UBS described Tesla’s automotive operations as the company’s current profit driver but said growth there is likely to be limited. The bank framed the planned end of Model S and Model X production as "the cherry on top for the EV to AI transition," suggesting the company is shifting emphasis from premium legacy models to its AI ambitions.
InvestingPro data cited by UBS shows a gross profit margin of 17.01% for Tesla, and the bank flagged this figure in assessing the automotive business’s contribution to overall valuation. Tesla’s latest results showed automotive gross margin excluding credits rose to 17.9%, an increase of 250 basis points from the prior quarter, which Tesla attributed to a better mix and pricing.
Recent financial results and analyst reactions
Tesla reported fourth-quarter revenue of $25 billion and earnings per share of $0.50, broadly in line with consensus estimates of $25.1 billion in revenue and $0.45 EPS. Following that report, several brokerages updated their targets and ratings in varying directions.
- Mizuho raised its price target to $540 from $530 and maintained an Outperform rating.
- Canaccord Genuity reduced its target to $520 from $551, citing a revised valuation model focused on AI developments.
- Goldman Sachs lowered its price target to $405 from $420, referencing Tesla’s increased capex plans for Full Self-Driving and robotics.
- Barclays kept an Equalweight rating and a $360 target, noting the phase-out of Model S and Model X, which Barclays said represent only 2% of Tesla’s volume in 2025 despite their symbolic value.
- Jefferies reiterated a Hold rating with a $300 target, describing the earnings call as particularly noteworthy.
Market volatility and recent share performance
UBS highlighted a higher risk profile for Tesla stock, consistent with the firm’s view of increased operational and capital allocation uncertainty. The bank noted Tesla’s beta of 1.84, indicating the stock has been materially more volatile than the broader market. Over the past six months, Tesla shares have appreciated 34.33%.
Conclusion
UBS’s decision to raise its numerical price target while maintaining a Sell rating reflects a nuanced view: the bank recognizes Tesla’s technological strengths but sees significant near-term financial pressure from a large increase in capex and delayed monetization of AI projects. Analysts across the sell-side have responded with a range of adjustments to price targets and ratings, underscoring divergent views on how Tesla’s transition toward AI and robotics will affect valuation and cash flow durability.