Is Tesla Stock Going to $310? 1 Wall Street Analyst Thinks So.

Tesla‘s (TSLA -6.55%) second-quarter earnings were a mixed bag for investors. The company sold more electric cars than many expected, but profits lagged estimates thanks to lower profit margins.

After digesting that report, widely followed Morgan Stanley analyst Adam Jonas decided to make Tesla his “top pick” with a price target of $310 per share. That would give Tesla a valuation of more than $1 trillion, and implies 35% upside from its recent share price.

Beyond Tesla’s EVs

Jonas doesn’t think the real value with Tesla lies with its electric vehicle (EV) sales. The analyst stated, “[With] more managed expectations on [cars], and powerful emerging drivers of firm value, we make Tesla our new top pick.”

Those emerging drivers are Jonas’ focus. Tesla is already seeing meaningful contribution from its energy business. The company announced record energy storage deployment in the second quarter. The quickly growing segment more than doubled storage deployments from the previous record first quarter. 

Image source: Tesla.

However, Jonas’ bullish call is mostly related to Tesla’s leading technology. That includes artificial intelligence (AI)-based computing power that is being used to train Tesla’s self-driving vehicle technology as well as its robotics segment.

That’s where investors need to temper excitement over his trillion-dollar valuation. Jonas even acknowledges that the recent slump in EV sales and profits may continue for a prolonged period. And that may be the more significant driver of the stock price in the near to medium term. Self-driving vehicles likely still have a long path to regulatory approval and mainstream use. That’s assuming the technology really can successfully solve the myriad issues for driverless cars.

Investors should be long-term thinkers with any stock. But that’s especially true with early-stage, or new technologies like EVs and EV batteries. The next phase for Tesla is more speculative, however. There’s a difference between long-term investing and speculative investing. Both may have a place in a portfolio, but investors should understand the difference with a stock like Tesla.