Tesla stock climbed early Thursday after Nvidia’s stronger-than-expected quarterly results revived investor confidence in the artificial intelligence trade that has dominated US equity markets this year.
The stock rose 5.9% to $428.91 in early trading, while the S&P 500 gained 1.7% and the Dow Jones Industrial Average added 1.3%.
Market sentiment broadly improved following Nvidia’s fiscal third-quarter report on Wednesday evening.
The chipmaker posted sales of $57 billion, exceeding the Wall Street consensus of $55 billion.
It also projected fourth-quarter revenue of about $65 billion, up from roughly $39 billion in the year-ago period.
Analysts had expected around $62 billion at the start of November.
Wedbush analyst Dan Ives called the results a “pop the champagne moment,” arguing that the numbers helped temper fears of an emerging AI bubble.
He wrote that Nvidia’s performance marked “another validation point for the AI Revolution,” adding that the industry is only in the “top of the third inning” of its growth cycle.
Nvidia shares rose 3.8% to $193.63 in early trading.
AI momentum spreads to Tesla stock
The connection between Nvidia’s earnings and Tesla’s rally is rooted in market composition.
The so-called Magnificent Seven — a group of mega-cap technology and AI-focused firms — now account for about 35% of the S&P 500’s $60 trillion in market capitalisation.
Tesla has increasingly been viewed as part of this AI cohort, with investors focusing as much on its ambitions in robotics and autonomous driving as on its electric-vehicle business.
Tesla CEO Elon Musk and Nvidia CEO Jensen Huang appeared together at the US–Saudi Arabia investment conference this week, fielding questions about AI infrastructure, robotics and future capabilities.
Musk has been saying that Tesla is pushing aggressively to position itself primarily as an AI and robotics company.
Analysts highlight advances in full self-driving
Tesla’s latest release of its full self-driving software continues to draw attention.
Piper Sandler analyst Alexander Potter reiterated an Overweight rating and a $500 price target after hosting investors at Tesla’s Fremont facility for demonstrations of FSD version 14.
Participants test-drove the system, including what Potter described as “a flawless robo-taxi ride to the hotel.”
Potter wrote that “we think FSD is a truly impressive product that is (probably) already better at driving than the average American,” noting that firsthand testing reinforced his view of its capabilities.
He encouraged investors who have not yet experienced the system to do so, arguing the software “continues to exceed expectations.”
Piper Sandler said much of the 75-minute investor Q&A with Tesla focused on autonomous driving progress and the company’s long-term robo-taxi strategy.
Stifel analyst Stephen Gengaro lifted his price target on Tesla from $483 to $508 earlier in the week while maintaining a Buy rating.
“We believe TSLA is very well positioned to deliver robust multi-year growth in 2024–27+,” Gengaro wrote, highlighting ongoing software advances and steady sales momentum.
The rally follows a period of soft performance for AI-linked stocks. The S&P 500 was down about 3% for the month through Wednesday, while the Nasdaq had fallen nearly 5%.
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