Tesla's $350 Billion Rally Isn't Just A Rebound — Gene Munster Says It's Riding On Margins, Robotaxis, AI And Elon Musk

Tesla Inc. (NASDAQ:TSLA) shares have surged 46% since late April, adding $350 billion in market capitalization despite expected delivery declines, according to Gene Munster, Managing Partner at Deepwater Asset Management.

What Happened: Munster attributes 65% of the rally to two key factors: better-than-anticipated automotive gross margins and Tesla’s reaffirmed timeline for launching its ride-hailing service in Austin.

“The reason investors are looking the other way is that Tesla remains the best-positioned company in physical AI — and long term, that should be worth more than $1.1 trillion,” Munster wrote Wednesday on X.

Another 25% of the stock’s momentum came from the May 10 pause on China tariffs, which eased concerns about potential 145% parts cost increases. The 10% move followed news that Tesla’s Board is developing contingency plans for Elon Musk‘s contested 2018 pay package.

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Why It Matters: The planned June robotaxi launch comes as federal regulators scrutinize how Tesla’s autonomous vehicles will handle challenging conditions. CEO Musk has promised a nationwide rollout by year-end, despite the National Highway Traffic Safety Administration requesting additional safety information.

“Heavy lifting ahead,” warns tech analyst Dan Ives, who estimates “15% to 20% permanent demand destruction” in Europe amid rising competition from Chinese automakers like BYD Co. Ltd. (OTC:BYDDF).

With first-quarter profits down 71%, Ives believes Tesla’s future increasingly hinges on its autonomy initiatives. The ride-hailing opportunity could significantly impact Tesla’s financial profile, with Munster noting the U.S. market generates approximately $90 billion in annual gross bookings across 4 billion rides.

Price Action: Tesla rejoined the trillion-dollar valuation club Wednesday after climbing 40% from April lows, though shares remain down 8.1% year-to-date in 2025.

Photo Courtesy: Josiah True on Shutterstock.com

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.