JPMorgan dropped its recommendation to sell Tesla stock for the first time in three years

JPMorgan has revised its rating on Tesla shares, which it has held since July 2023. Analysts of the investment bank also sharply increased the target price, which implies that they no longer expect the quotes to fall. Their argument is the company's potential in the field of physical AI.

June 5, JPMorgan improved the rating of Tesla shares from "below market", equivalent to a recommendation to sell, to neutral. At the same time, the investment bank increased the target price of securities of Elon Musk's company from $145 immediately to $475. The previous target implied a 65% drop in quotes relative to the close of trading on June 4, the new one means a growth potential of 13%.

Tesla should be seen as more than just a maker of electric cars, says bank analyst Rajat Gupta, Barron's reports. In his opinion, the company is at the forefront of physical AI development and is exploring new markets, including robotaxis and humanoid robots.

"Tesla's unique advantage, which is unrivaled on an industrial scale, is the degree of vertical integration of hardware and software, which has only increased over time, and the efficiency and speed of technology development," Gupta wrote.

The market is underestimating the synergies between Tesla's different business lines, the analyst said. For example, using battery and car plants as a testbed for robots should not only reduce the costs of the core car business, but more importantly, help test the product on an industrial scale, JPMorgan said in a note.

This is the first time in three years that JPMorgan has dropped its recommendation to sell Tesla stock, Barron's notes. The change in stance comes after coverage of the company shifted to Rajat Gupta from Ryan Brinkman, who has long been one of the most prominent Tesla skeptics on Wall Street.

Commenting on the company's first-quarter 2026 results, Brinkman wrote that the results and comments during the conference call raise concerns about the company's "insatiable greed for capital investment," Bloomberg recalls. Brinkman also warned that the automaker could face potential legal challenges after Musk admitted that millions of vehicles that are expected to operate autonomously in the future lack the necessary equipment.

Tesla shares sagged 3.6% in trading on June 5, and have fallen more than 10% since the beginning of the year.

At that, the average target price of the company's securities is 5% lower than their value at the last closing. The company has equal number of bullish and neutral ratings: 23. After the improvement of JPMorgan's assessment, there are seven analysts who stick to the recommendation to sell Tesla shares.

In April, another bear on Tesla - Joseph Spak of UBS - upgraded its rating, explaining that the stock price already reflects short-term risks in a more balanced way: rising costs for robotaxi startups and robot development, as well as declining electric car sales. In the longer term, Spak expects progress toward AI, too.

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