‘If there’s a bubble, Tesla is it’: Car maker soars on hopes for Musk’s robot push

Tesla shares are on a tear, sending the electric carmaker’s chief executive Elon Musk half-way to becoming the world’s first trillionaire. But will the upcoming crucial third-quarter sales figures be strong enough to sustain the momentum?

The stock rallied 33 per cent in September, notching their best month in almost a year, as investors rallied around Musk’s renewed focus on the company. Overnight, they jumped another 3.3 per cent, making the billionaire the first-ever person worth $US500 billion ($756 billion) , according to Forbes’ Real-Time Billionaires tracker.

Even more striking is Tesla’s ascent in the market since hitting a low in early April after US President Donald Trump paused his sweeping global tariffs. Since then, the share price has doubled, making it the best performer in the high-flying big tech cohort known as the Magnificent Seven.

The bet on Tesla is that Elon Musk can transform it from a car maker into an AI powerhouse.Credit: AP

The bet on Tesla is that Musk can transform it from a car manufacturer into an artificial intelligence powerhouse that makes robots and self-driving taxis. That goal is reflected in the unprecedented $US1 trillion pay package the company’s board proposed for Musk earlier this month.

But with the stock trading close to $US460, not far from the all-time high of $US479.86 it hit on December 17, the question is what will its sales for this quarter look like – and is the company at a peak in deliveries, at least in the short term.

“Tesla trades at an eye-watering multiple, its earnings are shrinking amid softening EV demand and cut-throat competition, and EV credits are about to expire, further dampening sales,” said Irene Tunkel, chief US equity strategist at BCA Research.

‘Tesla’s core business is worth $US150 a share. Anything investors pay over that for robo-taxis and robots is ‘Elon hyperbole’.’

The issues surrounding Tesla’s revenue and outlook are real. Tuesday was the last day that car buyers could access tax credits for electric-vehicle purchases because the Trump administration eliminated the incentives. Analysts expect third-quarter EV sales to show a jump across the board after consumers rushed to take advantage of the disappearing discount. From here, however, EV sales are likely to slow considerably, they say.

Leaders within the industry have expressed their own concerns. Ford chief executive Jim Farley said on Tuesday that US EV sales are likely to be cut in half, dropping from about 10 per cent of the market to 5 per cent as a result of Trump’s pro-petrol policies. Musk has also warned of “a few rough quarters” for Tesla due to America’s changing EV policies.

“Tesla’s core business is worth $US150 a share” said Ross Gerber, president and CEO of Gerber Kawasaki Wealth & Investment Management and a long-time Tesla investor. “Anything investors pay over that for robo-taxis and robots is ‘Elon hyperbole’.”

Still, as the rally in Tesla keeps going, Wall Street analysts have started joining in. The stock has received a slew of upgrades and increased price targets recently based on its potential AI prowess. Wedbush’s Dan Ives raised his price target to a street high of $US600 from $US500 last week, saying it is ready for “the next stage of its AI autonomous path”.

Musk has only encouraged this line of thought, saying the company will soon “feel almost like it is a sentient being” on his social media platform X last week. He also thinks 80 per cent of its revenue will ultimately come from AI robots.

“Tesla is the retail investors’ darling,” Tunkel said. “Tesla’s sharp rally has been fuelled by these investors’ enthusiasm for its future beyond EVs, as they are envisioning a company that mass-produces robo-taxis and humanoid robots, potentially tripling in value along the way.”

Right now, investors are buying “more on hope than fundamentals,” Gerber said. “Tesla’s core business has deteriorated fundamentally over the last six months.”

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To that point, electric vehicle sales have struggled, and Tesla’s burgeoning autonomous vehicle business is off to a stumbling start. In response, Musk shifted the company’s focus away from its core business and toward its Optimus robots venture.

A big reason for that transition is AI has become the driver of US economic growth and sharemarket returns. Looking at the Magnificent Seven companies this year, Tesla shares lag AI beneficiaries like Nvidia, Google’s parent Alphabet, Facebook and Instagram owner Meta Platforms and Microsoft.

Musk’s challenge, however, is that while those rival firms have clear AI operations that are already generating profits, Tesla’s plans are very much a work in progress with little to show so far.

“A dose of scepticism is likely warranted,” said Dave Mazza,, chief executive officer of Roundhill Financial. “But the market is rewarding AI leadership, and Tesla has an early lead in embodied intelligence. Right now, the results matter less than the vision.”

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In other words, Tesla’s underperformance means the stock has more room to run if it can legitimately catch the AI wave.

The company has “real momentum behind it” and could break out to a new high since AI has offered investors “a fresh dream to chase,” Mazza said. But it needs to show tangible progress on its projects.

The company will release its latest numbers on Thursday US time. It is likely to have delivered about 439,600 vehicles worldwide in the three months through September, according to analysts’ estimates compiled by Bloomberg. Although that would amount to about a 5 per cent drop from a year ago – and mark Tesla’s third-straight quarterly decrease – it would be an improvement relative to the first half of 2025 when vehicle sales tumbled 13 per cent.

While this week’s sales numbers may provide short-term fuel for Tesla’s rally, it’s the potential for long-term gains, or a reckoning, that has Wall Street on edge.

“Elon is selling a dream, and many retail investors are buying it,” BCA’s Tunkel said. “Can the rally continue? Sure – powered by momentum and FOMO.

“Yet if there’s a bubble in today’s hot market, Tesla is it.”

Bloomberg, with staff writers

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