Tesla Stock Rally Analysis: Melius 'Must Own' Call, AI Chip Progress, and Bearish Sentiment Contrasts

On November 24, 2025, Tesla (TSLA) experienced a 7% intraday stock pop following a bullish “must own” call from Melius Research, which highlighted Full Self-Driving (FSD) technology and AI chip progress as key catalysts [1]. Musk’s comments on Tesla’s in-house AI chips—current AI4 deployment and AI5 nearing tape-out—further fueled the rally [2,11]. However, the daily close saw a more modest 3.88% gain, with trading volume spiking to 96.81M shares (above the 30-day average of 89.79M) [3].

Contrasting this bullish movement, Reddit users expressed strong bearish sentiment, citing four main concerns: (1) FSD is overhyped and lags competitors like Waymo (which operates fully driverless rides in 5 U.S. cities) [5,6]; (2) declining financial performance (Q3 2025 EPS down 30% YoY to $0.50) [8,9]; (3) the stock jump is based on dubious or repetitive positive news [5]; and (4) investors are buying into the same narrative repeatedly [5].

1. Narrative Disconnect
   : Short-term stock volatility (7% intraday pop) driven by analyst calls and AI chip updates contrasts with long-term bearish concerns about FSD execution and profitability.
2. AI vs. FSD Focus
   : Melius’ call shifts focus from Tesla’s traditional automotive revenue to software/AI monetization (FSD subscriptions and AI chips), which could redefine the company’s valuation if executed [1,11].
3. Competitive Gap
   : Waymo’s lead in fully driverless city deployments (expanding to 4 more cities in 2026) raises questions about Tesla’s ability to capture autonomy market share [6,7].
4. Sentiment Divide
   : Analyst consensus remains “Hold” (38.8% Buy, 40% Hold, 21.2% Sell) with a $455 target (6.7% upside), reflecting uncertainty between bullish AI potential and bearish execution risks [0].

:

• FSD Lag
  : Tesla’s robotaxi program (targeting 8-10 cities by 2025 end) trails Waymo’s current footprint, delaying potential autonomy revenue [6,10].
• Profitability
  : Declining gross margins (18% YoY from 19.8%) and EPS (down 30% YoY) raise operational efficiency concerns [8,9].
• Regulatory Hurdles
  : EU’s strict safety standards may delay FSD approval until February 2026 [6].
• Sentiment Risk
  : Repetitive positive news cycles could lead to a market pullback if execution fails to meet expectations [5].

:

• AI Chip Vertical Integration
  : Tesla’s in-house AI chip development reduces reliance on external suppliers, creating a competitive moat [11,13].
• Long-Term Monetization
  : FSD subscriptions and robotaxi services could unlock a $7T autonomous driving market [1].

• Stock Performance
  : TSLA closed at $417.78 on November 24, 2025 (3.88% gain), with a 5-day performance of +6.03% [3,0].
• Financials
  : Q3 2025 revenue beat estimates ($28.1B, +12% YoY) but EPS missed ($0.50 vs. consensus $0.53) [8,9].
• AI Chip Progress
  : AI5 chip near tape-out, sample production in 2026, mass production in 2027 [11,13].
• Analyst Consensus
  : Hold with a $455 target (6.7% upside) [0].