Morgan Stanley Downgrades Tesla to Equal-Weight as Shares Slip on AI Reassessment
The bank contends Tesla’s AI-driven upside is largely reflected in the stock, signaling fewer near-term catalysts outside autos.
Overview
- Morgan Stanley cut Tesla from Overweight to Equal-weight and set a $425 price target, citing tempered views on non-vehicle businesses.
- Tesla fell 3.39% to $439.58 at the close after dropping more than 4% intraday following the downgrade.
- Analyst Andrew Percoco, now leading Tesla coverage at the bank, issued the first rating cut since it held Overweight from 2023.
- Percoco projected a 12% decline in Tesla’s North American EV sales volume in 2026 as part of a broader industry downturn.
- Despite the move, analyst views remain divided, with many buys and an average 12‑month target near $393, while several banks keep targets between $479 and $509.