UBS Sticks With Sell on Tesla (TSLA) as AI Optimism Runs Ahead of Fundamentals

Core Viewpoint - Tesla, Inc. is facing a challenging market environment with declining electric vehicle sales and negative earnings revisions, leading UBS to maintain a Sell rating with a price target of $247.00, despite acknowledging the company's technological advancements in AI [1][2]. Group 1: Stock Performance and Valuation - Tesla's stock price continues to rise even as electric vehicle sales decline, with consensus EPS estimates for 2025 and 2026 being 50% and 46% lower than a year ago [2]. - The market appears to be assigning a higher value to Tesla's AI ventures while applying a declining valuation to its core electric vehicle business [2][3]. Group 2: Positive Catalysts - Several positive catalysts for Tesla include the removal of the safety driver in Austin robotaxis, expansion of the operational design domain (ODD) and the number of cities for robotaxis, public use of robotaxis, updates to Full Self-Driving (FSD) versions, Cybercab production updates, and Optimus V3 updates [3][5]. - Despite the potential for these catalysts to drive stock performance, many developments are believed to be already reflected in the stock price [5]. Group 3: Technological Progress - Tesla's technological advancements are noteworthy but are considered to be already incorporated into the current stock price [4].