Bank of America (BofA) has increased on Wednesday its price target on Tesla by 38.1% citing the developments in the AI field, namely on the Robotaxi service.
The new target of $471 (up from $341) implies a slight upside of about 2% based on Tuesday’s closing price. The analyst maintained a Neutral rating on the stock.
In a new research note — first obtained by PriceTarget — analyst Federico Merendi justified the increase in the firm’s sum-of-the-parts (SOTP) analysis.
Through this, BofA defends that the Robotaxi business currently represents nearly half of Tesla‘s valuation.
On Tuesday, the company announced that it has expanded the geofenced area for its Robotaxi service in Austin for the first time in two months.
The area has increased by 44%, now covering 243 miles.
“Overall, we find that Tesla‘s core automotive business represents around 12% of the total value,” Merendi stated. Energy Storage follows, accounting for about 6%.
In the third quarter, Tesla’s automotive revenue stood at $21.2 billion, representing over 75% of the total revenue ($28.1 billion).
Looking at the next 15 years, the bank estimates that Tesla‘s valuation will be driven by the Full Self-Driving (FSD) software, representing roughly 17%, and the Optimus humanoid robot, at around 19%.
The firm expects a “higher valuation for Optimus to account for the potential entrance into international markets.”
In the latest earnings call, held last week, CEO Elon Musk revealed that the Optimus V3 will “probably” be unveiled in the first quarter of 2026.
“We are also on the cusp of something really tremendous with Optimus, which I think is likely to be, has the potential to be, the biggest product of all time,” Musk stated.
Earlier this month, RBC Capital analyst Tom Narayan also estimated that the Robotaxi and Optimus humanoid would both be accounting for over 30% on Tesla‘s valuation.
Merendi noted that the price target revision was also based on a less risky stock performance, with a “lower cost of equity capital.”
Tesla‘s stock has jumped over 40% in the past three months, recovering from the weak performance of the first half of 2025.
On Tuesday, Morgan Stanley also reaffirmed its bull case on Tesla, with a $800 price target — the highest among investors, followed by Wedbush, which predicts the company’s shares will reach $600.
According to analyst Adam Jonas, the proposal for Tesla‘s investment in xAI, which is currently being voted by shareholders ahead of the Annual Meeting on November 6, “deserves more attention.”
Tesla‘s Board has been actively promoting Musk’s compensation package, which requires shareholder approval, as several proxy advisory firms recommended that shareholders vote against the proposal.
The company’s Board of Directors has not officially recommended the shareholder-initiated xAI investment proposal.
When questioned by Bloomberg why the Board hadn’t recommended the proposal — and whether rejection meant Tesla wouldn’t pursue the investment — Denholm left it for shareholders to decide.
