For nearly three years, JPMorgan wore its Tesla (TSLA) pessimism as a badge of conviction; this morning, that conviction quietly folded.
In a research note on Friday, analyst Rajat Gupta – who took over TSLA coverage from long-time JPM auto expert Ryan Brinkman just weeks ago – upgraded the EV stock to “neutral”.
Gupta also raised the firm’s price target on Tesla stock to $475, indicating potential upside of about 20% from here.
Physical AI footprint to drive Tesla stock higher
Rajat Gupta is constructive on TSLA shares for one simple reason: the company is at the forefront of physical AI; that framing – physical, not merely digital – is doing a lot of heavy lifting.
It positions the company not as a struggling EV maker battling slowing demand and margin pressure but as one assembling the foundational layer for an entirely new generation of machines that move, sense, and act in the real world.
Tesla is entering new addressable markets where its ability to execute will be key to both adoption and market size, he told clients – adding the more efficient and capable these technologies become, the larger the market they ultimately create.
It’s a counterintuitive thesis, but one that reframes TSLA’s investment case away from the quarterly EV delivery tallies.
Gupta described the dynamic as “a classic flywheel effect, somewhat analogous to AWS and Kiva at Amazon” – referring to the internal robotics program Amazon.com Inc originally developed for its own warehouses before broader commercial deployment.
The analogy is deliberate – and telling. Amazon’s Kiva became a commercial juggernaut precisely because it was battle-tested inside AMZN logistics operations before it was ever sold externally.
Gupta is arguing that Tesla’s factories are doing the same for Optimus.
Should you load up on TSLA shares today?
The second pillar of JPMorgan’s revised thesis is Tesla’s vertical integration, a structural advantage that Gupta believes the market consistently undervalues.
In his research note, the analyst highlighted TSLA’s unmatched level of vertical integration across hardware and software, adding: “this aspect is still somewhat underappreciated and misunderstood.
The practical implications of that integration are what make the case for owning Tesla shares more compelling.
According to Rajat Gupta, Optimus could help decline automotive cost of goods sold by about 5% through manufacturing efficiency gains – not a trivial number for a company operating at the scale Tesla does.
Note that TSLA is converting its former Model S and Model X production line at Fremont into a humanoid robot manufacturing site with low-volume production targeted for the summer and high-volume output planned for 2027 at an eventual annual capacity of one million units.
All in all, JPM estimates the company’s EPS could inflect beyond 2028 and rise nearly “threefold” to about $7.50 by the end of this decade.
Revenue, the firm projects, will more than double from around $95 billion last year to more than $200 billion by 2030, with nearly half that growth driven by services and newer businesses tied to autonomy and robotics.
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