Morgan Stanley Downgrades Tesla (TSLA) But Raises Forecast: What’s the Real Play?

Wall Street's favorite game: moving the goalposts after the kick. Morgan Stanley just executed a classic maneuver—downgrading Tesla while simultaneously hiking its price target. It's the financial equivalent of saying 'your car is worse, but it's worth more.'

The Contradiction in Plain Sight

Analysts cut the rating, citing everything from valuation to execution risk. Yet the forecast gets a bump. The message is muddled: be cautious, but also optimistic. It leaves investors scratching their heads—do they sell on the downgrade or buy on the raised outlook?

Reading Between the Brokerage Lines

This isn't analysis; it's hedging. It protects the firm whether TSLA soars or tanks. For the rest of us, it highlights the noise in traditional equity markets—where narratives are built and broken on a spreadsheet, often detached from technological reality.

Meanwhile, in the digital asset space, conviction doesn't come with an asterisk. Protocols either work and attract capital, or they don't. No downgrade-to-upgrade gymnastics required. Just code, adoption, and transparent ledgers. A cleaner signal in a very noisy world.

Tesla (TSLA) Still Expected to Rise?

As mentioned, Morgan Stanley does still project gains ahead for Tesla (TSLA) stock, with its forecast receiving a slight boost. “This is a reflection of lower [auto] volume expectations, with a 10.5% reduction in 2026 volumes and 18.5% reduction in cumulative deliveries through 2040 due to our more cautious view on the pace of EV adoption in the US, coupled with growing competition in global markets,” Percoco added.

Tesla shares have been on the mend this past week after a bearish November. Several investing experts, such as Cathie Wood and Michael Burry, have even called out the company and its stock for being overrated. In early trading on Monday, TSLA shares fell around 3%, but remain up over 41% in the last six months.

Furthermore, analysts like Wedbush’s Dan Ives remain bullish on Tesla shares, and he believes the automaker’s AI future is where investors should be looking. “In my opinion, it’s going to be the most important chapter ever in Tesla’s story,” Ives said from the Yahoo Finance Invest event in New York last week. Ives has called the passage of Musk’s pay package a “bright green light” for Tesla’s AI and autonomous tech plans, and has an Outperform rating on the stock and a Street-high $600 price target.