Tesla (NASDAQ:TSLA) stock has had a turbulent run in 2025, swinging between sharp rallies and steep pullbacks as investors weigh margin pressures against bold long-term ambitions. While shares have recovered from their mid-year lows, the path forward remains a topic of debate. Recent earnings showed revenue growth but thinner profitability, and softer demand in China has added another layer of concern. Still, Tesla continues to see itself as far more than an automaker, positioning its future around AI and robotics.
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That confidence in Tesla’s long-term vision – and in Elon Musk’s ability to steer it there – was on full display with the company’s latest decision to grant him a potential $1 trillion compensation package. The move underlines how much faith shareholders still have in Musk’s leadership, even as critics question the size of the award.
Truist’s William Stein, an analyst who ranks in 4th spot among the thousands of Street stock experts, believes that by agreeing to the package, shareholders have done the right thing.
“Despite the nominally high price tag (via equity dilution), we see retaining Musk as imperative for the company’s success, and view the dilution as so well-aligned with equity holder interests, that we view the vote primarily as a removal of an overhang,” the 5-star analyst opined.
Both Tesla’s board and Musk have consistently stressed that the compensation package is not primarily about its monetary value, but rather about ensuring Musk stays on as leader and has influence through greater voting control, as physical AI initiatives become a more “obvious driver” of Tesla’s value.
During the company’s most recent earnings call, Musk reiterated that he is uneasy leading Tesla without holding at least 25% of the voting power (compared to his current roughly 15%), arguing that this level of control is essential to protect his vision of developing a “robot army” and launching offerings such as Cybercab.
Stein thinks this is a “believable threat” and that Musk could pursue similar projects – such as autonomous mobility and humanoid robots – through one of his other ventures. xAI appears to be the most plausible candidate, given its roster of top AI researchers, substantial computing infrastructure, and its development of the advanced AI model, Grok.
While Stein concedes the headline $1 trillion value is “stunning,” he points out that it is in equity and is “strongly aligned” with shareholder interests, as it is contingent on Tesla reaching progressively higher market cap targets along with specific operational milestones. If all of Musk’s awards were to be granted, Stein estimates the share price could rise by 384% from its current level, assuming no further dilution.
While most of its near-term earnings still come mainly from vehicle sales and, to a lesser extent, from its energy segment, Stein reckons that only about 11% of Tesla’s valuation is tied to autos and another 11% to energy. Given the stock trades at more than 100 times peak EPS and over 200 times 2026 consensus EPS, it’s “impossible to say with a straight face that investors aren’t putting a lot of AI future potential into valuation.”
The problem for Stein is that the uncertainty surrounding these physical AI initiatives makes it difficult to recommend the stock. The analyst counts three major AI projects (FSD, robotaxi, Optimus humanoid), which carry significant potential value, but none are certain enough at this stage to support a “more optimistic view on the shares.”
As such, Stein takes a balanced stance on the stock, giving it a Hold (i.e., Neutral) rating. His $406 price target implies that shares could dip about 6% from current levels. (To watch Stein’s track record, click here)
That view lines up with the Street’s overall sentiment. The consensus rating also sits at Hold, reflecting a mix of 14 Buys against 10 Holds and 10 Sells. On average, analysts see the stock sliding 11% to $382.54 over the coming year. (See TSLA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.