Tesla stock rebounded strongly early Thursday following a volatile prior session that saw the stock swept up in a broader selloff tied to artificial intelligence-related names.
Shares of the electric-vehicle maker were up around 5% at $490.32 in early trading.
The move followed a 4.6% decline on Wednesday, when Tesla fell despite hitting a fresh intraday record earlier in the day.
During that session, the stock traded as high as $495.28.
The midweek drop came as investors locked in profits across high-valuation technology and AI-linked stocks.
Tesla’s rebound suggests investors remain willing to buy dips, even as concerns grow around the company’s stretched valuation and slowing momentum in its core automotive business.
A rally built on Musk’s AI vision
Tesla’s recent surge reflects investors’ continued belief in Chief Executive Officer Elon Musk’s broader technological vision, which includes driverless cars, humanoid robots, and other AI-driven initiatives.
The company’s shares are up roughly 20% over the past four weeks. Since falling to a low on April 8 amid heightened market anxiety tied to the Trump administration’s tariff policies, the stock has rallied 111%.
That rebound places Tesla among the top 20 performers in the S&P 500 Index over that period.
While the rally underscores Wall Street’s confidence in Tesla’s artificial intelligence ambitions, it has also pushed the stock to extreme valuation levels.
Tesla now trades at about 214 times estimated earnings over the next 12 months, making it the second most expensive stock in the S&P 500 on a forward earnings basis.
Only Warner Bros Discovery Inc. trades at a higher multiple, while Palantir Technologies Inc., another AI-linked favourite, trades at 178 times forward earnings.
Analysts say auto business is a small part of valuation
Some analysts argue that Tesla’s valuation no longer reflects its car business in any meaningful way.
Jed Dorsheimer, head of energy research at William Blair, said the market is now valuing Tesla primarily as a robotics and autonomy company rather than an automaker.
Dorsheimer said Tesla’s automotive business is worth only $30 to $40 per share, a small fraction of its current trading price.
He added that the market has largely completed its re-rating of Tesla away from vehicle sales and toward future technologies such as robotaxis, energy systems, and the Optimus humanoid robot.
According to Dorsheimer, autonomy now accounts for more than 70% of Tesla’s total valuation. He also suggested that Tesla’s energy business may be worth more than its vehicle segment.
However, he cautioned that much of the company’s current valuation rests on expectations of future execution rather than present-day earnings.
Tesla’s rebound highlights the delicate balance facing investors. While enthusiasm around artificial intelligence, autonomy, and robotics continues to underpin the stock, the company’s valuation leaves little room for disappointment.
As Tesla pushes further into non-automotive businesses, the gap between expectations and current financial performance remains wide.
For now, investors appear willing to accept that risk, betting that Musk’s vision will eventually justify the premium embedded in Tesla’s share price.
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