Morgan Stanley maintains a positive outlook on Tesla, keeping an Overweight rating and aiming for a $410 price target. This view persists despite the stock experiencing pressure due to Elon Musk’s recent conflict with Donald Trump.

The bank recognises the current volatility but downplays long-term risks such as possible EV tax credit cuts. It stresses Tesla’s value extends beyond electric vehicles, indicating other sectors as influential to its success.

The recent rise in Tesla’s stock was attributed to optimism regarding Musk’s focus on Tesla’s main business. However, the dispute with Trump might impact consumer sentiment in the short term.

Morgan Stanley identifies Tesla’s strength in AI, robotics, energy solutions, and infrastructure as stable and largely unaffected by political changes. They believe Tesla’s AI and tech capabilities remain undervalued, advising attention to the company’s long-term growth rather than short-term fluctuations.

The analysis above presents a firm belief in Tesla’s potential, despite immediate market reactions. While the stock has come under pressure lately, particularly due to controversies surrounding its Chief Executive and his remarks regarding the former U.S. President, Morgan Stanley appears unmoved in its broader evaluation of the company. The price target remains well above present trading levels, reflecting substantial confidence in value stretching far beyond electric vehicle sales alone.

The bank essentially acknowledges recent volatility but treats it as noise rather than a genuine shift in trend. Specifically, it sees potential threats—like changes in U.S. tax incentives—as unlikely to derail the company’s long-term trajectory. In this view, temporary political or regulatory fog doesn’t create enough drag to alter their valuation model. The attention, instead, is drawn to Tesla’s advancements in artificial intelligence, renewable energy storage, and autonomous systems. These areas are considered structurally sound and likely to serve as the core of revenue generation further down the line, increasingly independent of the firm’s more public-facing products.

Cautiously optimistic sentiment surrounding management’s renewed focus may have contributed to the recent rebound in share price, though that momentum might be tested again in the near term. Political headlines are unsettling investor sentiment, particularly among retail buyers. These headlines may initiate further swings over the coming trading sessions, even if underlying demand for the stock remains.

We assess the market as currently reacting more to headlines than to model-driven valuation. As such, these pulls and drags caused by press statements or public spats are worth monitoring but not reacting to outright. Our recommendation is to balance exposure accordingly and tighten risk controls, especially for anyone holding delta-sensitive positions.

Given the bank’s emphasis on the undervalued nature of Tesla’s non-auto verticals, it suggests there’s more ground to recover—even after the most recent rally. The AI segment appears notably central to that thesis. On this basis, we expect institutional sentiment to lean supportive, which may limit the downside, even in the face of temporary sentiment-driven selling.

Option traders should anticipate a rise in implied volatility around upcoming appearances or remarks from management, particularly if media coverage remains heightened. Gamma exposure may become more pronounced around technical support levels. We are approaching a period where price dislocation from fundamental value may open windows for directional strategies or short-term swings.

Adjust positioning for short-duration trades and stay alert for volume spikes, which could offer clues about participant shifts. For now, hold a bias toward accumulating on dips rather than chasing extended moves upward. Use defined risk, and avoid overextension.