TSLA Stock Breaks Records: Why It's a Must-Buy Going Into 2025

Electric vehicle (EV) giant Tesla’s TSLA rally just doesn’t seem to stop. Its shares rose for the sixth straight trading session yesterday to close at $424.77, hitting a record high. It marked the first time that shares surpassed the $420 threshold since its stock split in 2022.And what a roller coaster year it has been so far for Tesla! The year began with a sharp 30% plunge in its stock price in the first quarter, driven by concerns over declining revenues and vehicle margins woes. It marked Tesla’s worst quarter since late 2022. Fast forward to the present, the company’s financial and operating metrics have been improving. And the excitement and bullishness surrounding Tesla are just insane.After doubling in value in 2023, TSLA shares are up more than 70% in 2024, with most of the gains coming since Donald Trump’s election victory last month. The company has reassured investors with steady advancements in its product lineup, robust delivery growth and strategic moves to bolster its position in key markets.YTD Price Performance Image Source: Zacks Investment ResearchAfter such an impressive rally, it’s natural for investors to wonder if they have missed the boat. But considering the sentiment around the stock and several growth catalysts, Tesla still remains a top pick for 2025.Brokers Turn Bullish, Price Targets SoarThe bullish sentiment around Tesla is evident from the recent price target upgrades from prominent brokers. Bank of America (BofA) Securities raised its price target from $350 to $400, citing Tesla’s advancements in Full Self-Driving (FSD) technology and the potential launch of its robotaxi fleet.Similarly, Wedbush Securities’ Dan Ives emphasized Tesla’s leadership in artificial intelligence (AI) and autonomous driving, dubbing it the market’s most undervalued AI play. Goldman Sachs and Morgan Stanley also joined the chorus, lifting their price targets to $345 and $400, respectively.Despite these elevated targets still sitting below the current stock price, analysts argue that Tesla’s growth story is far from over. With the stock’s momentum and a potential Santa Rally on the horizon, it wouldn’t come much as a surprise if Tesla breaches the $500 mark before the year ends.TSLA Trades Above 50 & 200-Day SMA Image Source: Zacks Investment ResearchTSLA Set to Shine Under Trump 2.0CEO Elon Musk’s ties with Trump have been paying off. Last month, Trump appointed Musk to co-lead the newly established Department of Government Efficiency (DOGE). Being the co-leader of DOGE, Musk secures a pathway to advance Tesla’s innovative goals without excessive regulatory red tape. Trump’s push to repeal the $7,500 EV tax credit aligns with Tesla’s strengths. Unlike its competitors, Tesla has outgrown the need for such incentives, thanks to its massive scale and brand loyalty.Moreover, Trump’s tough stance on China could further bolster Tesla’s U.S. market share. With Chinese EV makers facing potential tariffs, Tesla’s dominant domestic production capacity positions it to capture a larger slice of the market.The administration’s plans to establish a unified federal framework for autonomous vehicles also bode well for Tesla and can remove significant hurdles that have hampered Tesla’s rollout of FSD technology. Key Catalysts to Drive Tesla in 2025Full Self-Driving and Robotaxi Potential: Tesla’s FSD software has made significant strides, with the latest update (version 13.2) introducing features like reverse driving and auto-parking. Early user feedback suggests the company is nearing a breakthrough in autonomous driving. With regulatory support under the new administration, Tesla’s much-anticipated robotaxi service could become a reality by 2025. Musk has promised ride-hailing robotaxis in Texas, California and a few other states by next year. As General Motors GM quits the robotaxi race, Tesla’s main competition narrows to Alphabet’s GOOGL Waymo. (Robotaxi Face-Off: It's Waymo Vs. Tesla After General Motors' Exit)Energy Generation and Storage Expansion: Tesla’s energy division has been a standout performer, with revenues growing at a triple-digit compound annual growth rate (CAGR) over the past three years. This segment, which includes products like the Megapack, boasts the highest margins among Tesla’s business units. The ramp-up of the Megapack factory to meet soaring demand positions Tesla to capitalize on the global energy transition.Charging Network Monetization: Tesla’s extensive North American Charging Standard (NACS) network, with over 60,000 supercharger connectors globally, has emerged as a significant revenue driver. The adoption of Tesla’s charging standard by major automakers (including GM, Ford and others) underscores its dominance in this space, creating a lucrative long-term growth opportunity.Cybertruck’s Success: The Cybertruck has quickly become a bestseller, ranking as the third most popular EV in the United States in the September quarter. The model achieved positive gross margins for the first time, highlighting its profitability potential. The Cybertruck’s success reinforces Tesla’s innovation-driven brand image.Strong Delivery Outlook and Margin Improvement: Musk’s forecast of 20%-30% growth in vehicle deliveries for 2025 underscores Tesla’s robust demand trajectory. TSLA has also made progress in improving automotive gross margins (excluding leasing and regulatory credits), which rose to 18.6% last quarter due to lower raw material and logistics costs.A Fortress Balance Sheet: Tesla exited the third quarter of 2024 with over $33 billion in cash and equivalents, alongside a long-term debt-to-capitalization ratio of just 7% — significantly lower than the industry average. With record operating cash flows of $6.3 billion last quarter, Tesla has the financial flexibility to pursue growth initiatives and weather potential market headwinds.TSLA’s Growth EstimatesThe Zacks Consensus Estimate for Tesla’s 2025 sales and EPS implies a year-over-year uptick of 17.4% and 32.4%, respectively. Its EPS estimates have witnessed positive revisions in the past 30 days. Image Source: Zacks Investment ResearchLast WordTesla is no longer just an automaker but a transformative force in the clean energy and technology sectors. With a robust pipeline of growth catalysts, including advancements in autonomous driving, a thriving energy business, and strong vehicle delivery expectations, Tesla’s outlook for 2025 is quite promising. The “Trump bump” adds another layer of optimism, providing policy support for Tesla’s innovative endeavors.While some may argue that Tesla’s stock has rallied too far too fast, its upward trajectory appears sustainable, given the company’s unparalleled market position and growth potential. For investors seeking long-term gains, TSLA remains a compelling buy even at current levels.Tesla sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.Zacks Naming Top 10 Stocks for 2025Want to be tipped off early to our 10 top picks for the entirety of 2025?History suggests their performance could be sensational.From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2025. Don’t miss your chance to get in on these stocks when they’re released on January 2.Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report General Motors Company (GM): Free Stock Analysis Report Tesla, Inc. (TSLA): Free Stock Analysis Report Alphabet Inc. 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