Tesla Faces Bearish Turn as Long-Time Bull Issues Sell Call
Trip Chowdhry, historically one of Tesla’s strongest supporters, has issued a sharp downgrade on Tesla, recommending a sell rating and setting a $150 price target for 2026. He argues that the company’s AI-driven investment narrative has effectively broken down.
Tesla shares recently closed at $367.96, marking an 18% decline year-to-date.
AI Narrative Under Scrutiny
Chowdhry warned that Tesla’s growth story tied to artificial intelligence—particularly its connection to xAI—has lost credibility. He compared the situation to 3D Systems Corporation, which his firm previously predicted would collapse from its 2013 peak of $84 to under $2.
He stated that relying on future AI developments to justify Tesla’s valuation is increasingly risky, cautioning investors against waiting for a new narrative to drive the stock higher.
Warning Against “Investment Thesis Inertia”
The analyst also highlighted what he calls “investment thesis inertia,” where investors continue to hold positions despite weakening fundamentals. He challenged the market to demonstrate that Tesla is not falling behind in AI capabilities and urged clients to take profits while valuations remain elevated.
Growing Skepticism Across Wall Street
Chowdhry’s bearish outlook adds to increasing pressure from other major institutions.
UBS analyst Joseph Spak recently lowered Tesla’s Q1 2026 delivery forecast to 345,000 vehicles. This represents an 18% drop from Q4 2025 levels and falls below consensus expectations of 371,000 units. UBS maintained a Sell rating with a $352 price target.
Meanwhile, Morgan Stanley downgraded Tesla to Equal-Weight from Overweight in late 2025. Analyst Andrew Percoco set a $425 target, noting that strong AI expectations had already pushed the stock closer to fair value.
Bank of America also revised its rating to Neutral, highlighting that robotaxi ambitions account for roughly half of Tesla’s valuation—despite significant execution risks.
Valuation Concerns Intensify
Tesla currently trades at approximately 210 times projected earnings over the next 12 months, making it one of the most expensive companies in the S&P 500.
Analyst sentiment remains divided, with 23 buy ratings, 17 hold ratings, and 8 sell recommendations. The average price target stands at $421.27, reflecting ongoing uncertainty around the company’s future performance.
Key Catalysts Investors Should Watch
Upcoming developments will be critical for Tesla’s outlook. Investors are closely watching the Q1 2026 delivery report expected in early April, which will indicate whether demand is weakening or holding steady.
Additionally, Tesla’s earnings call later in April will provide important updates on AI initiatives, robotaxi development timelines, and profit margins.
Wide Gap Between Bull and Bear Cases
The divergence in analyst views is striking. Bearish projections like Chowdhry’s $150 target contrast sharply with more optimistic forecasts—such as Wedbush Securities, which has suggested Tesla could reach $600.
Ultimately, Tesla’s future valuation will depend on its ability to deliver tangible progress in AI and autonomous driving, rather than relying on forward-looking narratives.
