Tesla NASDAQ:TSLA shares rose about 1.5% on Thursday after UBS raised its price target on the electric vehicle maker to $442 from $364, reflecting a higher long-term valuation tied to the company's artificial intelligence and robotics initiatives.
UBS analyst Joseph Spak said the revised target is driven by Tesla's potential beyond its automotive business. The update places greater value on the company's investments in physical AI, including its Optimus humanoid robot program, Full Self-Driving technology and Dojo, the in-house supercomputer used to train AI models.
Physical AI refers to artificial intelligence that interacts with real-world environments through autonomous systems and robots. UBS suggested those businesses could become meaningful contributors to Tesla's future revenue, although the research note did not indicate any change to the firm's investment rating.
The analyst said the higher valuation reflects evolving expectations for Tesla's AI strategy rather than changes to vehicle sales or profit forecasts. UBS noted future milestones, including Optimus production timelines and additional data on Full Self-Driving commercialization, may provide further evidence supporting the company's longer-term growth outlook.