Investor's Corner
Tesla to focus on “narrow AI” and neural maps in next-gen Autopilot
Tesla reported Q2 financials yesterday which lacked new actionable information for Tesla traders, but provided some unexpected details on one topic, autonomous driving.
Neel N. Mehta of Morgan Stanley was first to ask for a “an update on Tesla’s proprietary mapping initiatives.”
Elon initially responded that “I think we would prefer to be confidential in that regard,” but Elon being Elon further explained that “what we’ve said thus far is that there’s need to have much higher definition maps than currently exists anywhere in the world in order to have full autonomy. And we’re in the process of building those and I think making good progress.”
Later on in the call, James J. Albertine of Consumer Edge Research asked to “understand in more detail I think how you [Elon] plan to get to fully autonomous.” Elon finally relented and said “Well, again, major product announcements are not – I shouldn’t do those on an earnings call, obviously. And all I’d say is that full autonomy is going to come a hell of a lot faster than anyone thinks it will. And I think what we’ve got under development is going to blow people’s minds. It blows my mind, so.”
Elon was not done. Colin Rusch of Oppenheimer went back on the subject and asked “how you guys are going to approach that functionality going forward with the driver assist in the autonomous driving push going forward?” Elon answered that “I think we’ll have a more significant announcement on that later. So it’s not really – earnings call is not the right time for that except that it will be a Tesla solution, internal solution.”
-->The analysts were not done with the topic. Brad Erickson of Pacific Crest Securities pounded on asking “Just had a quick follow up, I guess, on something that’s been asked a couple of times; take another run at it. I guess given that you’re obviously no longer working with this key supplier [Mobileye] around full autonomy. What are the major hurdles that you see for Tesla here to overcome to get to full autonomy? Is it just a case of software development, lots more miles driven and basically getting the right people in place? Any color on sort of some of the key challenges you’re facing and where you’re particularly focused for delivering full autonomy at some point?”
“It’s exciting, it blows me away, the progress we’re making.” – Elon Musk
Elon finally gave some more details: “Well, full autonomy is really a software limitation. I mean the hardware is just to create full autonomy, so it’s really about developing advanced, narrow AI for the car to operate on. I want to emphasize narrow AI, it’s like not going to take over the world, but it needs to be really good at driving a car. So increasingly sophisticated neural maps that can operate in reasonably sized computers in the car. That’s our focus. I’m very optimistic about this. It’s exciting, it blows me away, the progress we’re making. So I think if I’m this close to it and it’s blowing me away, it’s really going to blow other people away when they see it for the first time.”
According to Wikipedia, “narrow AI,” also known as “weak AI”, “defines non-sentient computer intelligence or AI that is focused on one narrow task. Weak AI is defined in contrast to either “strong AI” (a machine with consciousness, sentience and mind) or “artificial general intelligence” (a machine with the ability to apply intelligence to any problem, rather than just one specific problem).” Wikipedia cites Apple’s Siri as an example of a “narrow AI”.
Combining all of Elon’s responses, we can expect a major [significant] announcement regarding an internal Tesla solution to autonomous driving, which will involve a combination of “narrow AI” software implementing sophisticated neural maps, and much higher definition maps but likely no major new hardware. So much for being “confidential.”
This is great news to current Tesla owners because it is a “software” solution: current Model S, Model X and eventual Model 3 owners may be capable of full autonomous driving.
-->If Elon thinks that all of this “is going to blow other people away”, it probably will.
Photo credit: Garth Woodworth
Investor's Corner
Mizuho keeps Tesla (TSLA) “Outperform” rating but lowers price target
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected.
Mizuho analyst Vijay Rakesh lowered Tesla’s (NASDAQ:TSLA) price target to $475 from $485, citing potential 2026 EV subsidy cuts in the U.S. and China that could pressure deliveries. The firm maintained its Outperform rating for the electric vehicle maker, however.
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected. The U.S. accounted for roughly 37% of Tesla’s third-quarter 2025 sales, while China represented about 34%, making both markets highly sensitive to policy shifts. Potential 50% cuts to Chinese subsidies and reduced U.S. incentives affected the firm’s outlook.
With those pressures factored in, the firm now expects Tesla to deliver 1.75 million vehicles in 2026 and 2 million in 2027, slightly below consensus estimates of 1.82 million and 2.15 million, respectively. The analyst was cautiously optimistic, as near-term pressure from subsidies is there, but the company’s long-term tech roadmap remains very compelling.
Despite the revised target, Mizuho remained optimistic on Tesla’s long-term technology roadmap. The firm highlighted three major growth drivers into 2027: the broader adoption of Full Self-Driving V14, the expansion of Tesla’s Robotaxi service, and the commercialization of Optimus, the company’s humanoid robot.
“We are lowering TSLA Ests/PT to $475 with Potential BEV headwinds in 2026E. We believe into 2026E, US (~37% of TSLA 3Q25 sales) EV subsidy cuts and China (34% of TSLA 3Q25 sales) potential 50% EV subsidy cuts could be a headwind to EV deliveries.
-->“We are now estimating TSLA deliveries for 2026/27E at 1.75M/2.00M (slightly below cons. 1.82M/2.15M). We see some LT drivers with FSD v14 adoption for autonomous, robotaxi launches, and humanoid robots into 2027 driving strength,” the analyst noted.
Tesla stock (NASDAQ: TSLA) has landed an elusive “must own” status from Wall Street firm Melius, according to a new note released early this week.
Analyst Rob Wertheimer said Tesla will lead the charge in world-changing tech, given the company’s focus on self-driving, autonomy, and Robotaxi. In a note to investors, Wertheimer said “the world is about to change, dramatically,” because of the advent of self-driving cars.
He looks at the industry and sees many potential players, but the firm says there will only be one true winner:
“Our point is not that Tesla is at risk, it’s that everybody else is.”
The major argument is that autonomy is nearing a tipping point where years of chipping away at the software and data needed to develop a sound, safe, and effective form of autonomous driving technology turn into an avalanche of progress.
Wertheimer believes autonomy is a $7 trillion sector,” and in the coming years, investors will see “hundreds of billions in value shift to Tesla.”
A lot of the major growth has to do with the all-too-common “butts in seats” strategy, as Wertheimer believes that only a fraction of people in the United States have ridden in a self-driving car. In Tesla’s regard, only “tens of thousands” have tried Tesla’s latest Full Self-Driving (Supervised) version, which is v14.
Tesla Full Self-Driving v14.2 – Full Review, the Good and the Bad
When it reaches a widespread rollout and more people are able to experience Tesla Full Self-Driving v14, he believes “it will shock most people.”
Citing things like Tesla’s massive data pool from its vehicles, as well as its shift to end-to-end neural nets in 2021 and 2022, as well as the upcoming AI5 chip, which will be put into a handful of vehicles next year, but will reach a wider rollout in 2027, Melius believes many investors are not aware of the pace of advancement in self-driving.
Tesla’s lead in its self-driving efforts is expanding, Wertheimer says. The company is making strategic choices on everything from hardware to software, manufacturing, and overall vehicle design. He says Tesla has left legacy automakers struggling to keep pace as they still rely on outdated architectures and fragmented supplier systems.
Tesla shares are up over 6 percent at 10:40 a.m. on the East Coast, trading at around $416.
Investor's Corner
Tesla analyst maintains $500 PT, says FSD drives better than humans now
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Tesla (NASDAQ:TSLA) received fresh support from Piper Sandler this week after analysts toured the Fremont Factory and tested the company’s latest Full Self-Driving software. The firm reaffirmed its $500 price target, stating that FSD V14 delivered a notably smooth robotaxi demonstration and may already perform at levels comparable to, if not better than, average human drivers.
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Analysts highlight autonomy progress
During more than 75 minutes of focused discussions, analysts reportedly focused on FSD v14’s updates. Piper Sandler’s team pointed to meaningful strides in perception, object handling, and overall ride smoothness during the robotaxi demo.
The visit also included discussions on updates to Tesla’s in-house chip initiatives, its Optimus program, and the growth of the company’s battery storage business. Analysts noted that Tesla continues refining cost structures and capital expenditure expectations, which are key elements in future margin recovery, as noted in a Yahoo Finance report.
Analyst Alexander Potter noted that “we think FSD is a truly impressive product that is (probably) already better at driving than the average American.” This conclusion was strengthened by what he described as a “flawless robotaxi ride to the hotel.”
-->Street targets diverge on TSLA
While Piper Sandler stands by its $500 target, it is not the highest estimate on the Street. Wedbush, for one, has a $600 per share price target for TSLA stock.
Other institutions have also weighed in on TSLA stock as of late. HSBC reiterated a Reduce rating with a $131 target, citing a gap between earnings fundamentals and the company’s market value. By contrast, TD Cowen maintained a Buy rating and a $509 target, pointing to strong autonomous driving demonstrations in Austin and the pace of software-driven improvements.
Stifel analysts also lifted their price target for Tesla to $508 per share over the company’s ongoing robotaxi and FSD programs.
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