Tesla (NASDAQ: TSLA) stock has kind of been forgotten about recently. In a market dominated by high-flying AI chip shares, it has taken a backseat and this is reflected in its share price, which has fallen by almost 30% this year.
Is there still potential here? Let’s take a look at analysts’ forecasts to see where they see the stock heading in the medium term.
Analysts remain bullish
According to my data provider, the average 12-month price target for Tesla is currently $392. That’s around 23% higher than the current share price. If it was to be hit, a $3,000 investment today would grow to around $3,675. That’s a decent return in the medium term.
Is that achievable?
Now, analysts’ forecasts should never be relied upon because, often, they turn out to be off the market. I wouldn’t be surprised to see Tesla hit $392 though. One factor that could drive the share price higher in the medium term is speculation around a takeover from SpaceX.
A lot of investors believe that a merger would make a lot of sense. Not only is Elon Musk the CEO of both businesses, but there’s a lot of operational overlap.
For example, Tesla already supplies batteries and manufacturing technologies for some SpaceX projects. Meanwhile, the two companies are jointly developing Terafab, a semiconductor manufacturing facility designed to produce AI chips.
Note that on the company’s Q2 earnings call, Musk was asked about the possibility of a deal by analysts. He didn’t confirm anything… but he also refused to rule a deal out.
Gene Munster, managing partner at Deepwater Asset Management, which has a position in Tesla stock, believes there’s a 90% chance the two companies will come together.
Could the stock keep sliding?
On the other hand, I also wouldn’t be surprised to see Tesla’s share price continue falling. Because the company’s valuation remains very high, even after its recent dip.
With analysts forecasting earnings per share of just $2.04 for 2026, the forward-looking price-to-earnings (P/E) ratio’s about 157. That earnings multiple doesn’t make much sense to me given that Tesla is now a mature company and its profit growth is stalling.
Now, the Tesla bulls point to the company’s moves in areas such as self-driving cars and humanoid robots as justification for the lofty valuation and these technologies do look exciting. I’m just not convinced that Tesla will dominate these industries in the same way it dominated electric vehicles.
Zooming in on humanoid robotics, there are a ton of companies developing these today and many are well ahead of Tesla when it comes to production and commercialisation. One other issue is that Tesla’s going to have to spend a lot of money to pivot towards these technologies and that’s likely to hit its profits and cash flows.
In Q2, Tesla made capital expenditures of $5.8bn, more than double the figure in Q2 of 2025. Free cash flow for the quarter was negative.
Better opportunities in the market?
In conclusion, Tesla’s a bit of a tricky stock. There are definitely some reasons to be bullish but at the same time, we can’t rule out further share price weakness.
Personally, I won’t be buying the stock any time soon. In my view, there are better opportunities in the market to consider today.
Should you invest £5,000 in Tesla right now?
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Edward Sheldon does not hold any positions in the companies mentioned
