Tesla’s Next Act: From Cars to “Physical AI”
The rally is spreading. The Russell 2000 (+2.51%) just hit its first record since 2021, joining the S&P 500, Dow, and Nasdaq at fresh highs.
But while the market broadens, Tesla remains in the spotlight. Shares are up 22.6% in the past month, and Baird’s Ben Kallo just upgraded the stock to outperform, hiking his target from $320 to $548.
His bullish view isn’t about cars. With EV sales slowing, Kallo says Tesla’s future lies in robots and robotaxis — the foundation of what Elon Musk calls a “physical AI” company.
Baird’s 10-year framework (2026–2035) envisions:
- 20M vehicles sold (though growth may turn negative after 2025).
- 10M full self-driving subs, if half of buyers opt in.
- 1M robots (likely Optimus), priced at ~$20K with 50% margins.
- 1M robotaxis, scaled via customer-owned Teslas.
If Tesla clears those milestones, Baird sees a path to a $5.5T market cap and a $1,412 share price.
In a “bull case,” doubling those volumes could lift Tesla to $12T in value, with shares soaring to $3,043.
Kallo stresses these are stretch scenarios — not his base case. Still, he argues Tesla is evolving from a carmaker into the leader of a new era: physical AI.
John Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis.
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