Tesla (TSLA) Stock: AI Selloff Slams Brakes on All-Time High Run – What Happens Next?

Tesla's stock just hit the accelerator, then slammed into a wall. After touching a record peak, the electric vehicle giant's shares plunged Wednesday in a market-wide AI selloff. The reversal was sharp, sudden, and left investors scrambling.

The AI Profit-Taking Plunge

Wednesday's drop wasn't about faulty wiring or missed delivery targets. This was a classic sector-wide rotation, with traders cashing out of overheated artificial intelligence plays. Money flowed out of tech darlings as fast as it had flowed in, proving once again that on Wall Street, 'long-term vision' often means 'until next Tuesday.'

Beyond the Volatility: The Core Engine

Ignore the daily noise. Tesla's real story remains its dual identity: a car company that's also a tech and energy disruptor. Its valuation has long baked in future bets on autonomy, robotics, and software—ambitions that make quarterly vehicle deliveries look almost quaint. The stock doesn't just track cars; it trades on faith in a CEO who sells the future.

What's Next for the Rollercoaster?

Expect turbulence. Macro fears, interest rate jitters, and the fickle sentiment around growth stocks will keep the ride bumpy. The key question isn't about this week's chart—it's whether the core thesis of electrification and automation remains intact. For believers, dips are buying opportunities. For skeptics, this is a reminder that even the shiniest tech story can't defy gravity forever. In the end, the market is a voting machine in the short term, and Tesla just lost a popular vote. The long-term weighing is still to come.

TLDR

• Tesla stock rebounded 1.4% to $473.65 on Thursday morning after dropping 4.6% Wednesday during a broader AI sector selloff
• Shares hit a record high of $495.28 on Tuesday before Wednesday’s decline, marking the first record close since December 2024
• The AI selloff was triggered by Mythic, an AI chip startup, raising $125 million to develop energy-efficient AI chips
• Tesla has begun testing unoccupied self-driving cars in Austin, Texas, moving closer to launching its robotaxi service
• Despite electric vehicle sales weakness, Tesla stock is up 16-21% year to date as investors focus on autonomous driving and AI capabilities

Tesla stock bounced back Thursday morning after getting caught in Wednesday’s AI sector selloff. Shares ROSE 1.4% to $473.65 in early trading.

Tesla, Inc., TSLA

The recovery comes after a rough Wednesday. Tesla dropped 4.6% as AI-related stocks tumbled across the board.

Wednesday’s selloff happened right after Tesla hit a record high. Shares traded at $495.28 for the first time ever earlier that day.

The decline was part of a broader AI sector retreat. Nvidia fell 3.8% and GE Vernova plunged 10.5%.

The selloff was triggered by news that Mythic raised $125 million. The AI chip startup aims to solve what it calls “the biggest problem of AI—its insatiable, ruinous energy consumption.”

Lower energy consumption WOULD actually benefit Tesla. The company uses AI computing for its self-driving technology and robotics efforts.

But investors didn’t stop to consider the details. Most AI-related stocks fell regardless of whether the news was good or bad for them.

The Bigger Picture: Tesla’s AI Transformation

Tuesday’s record high capped a recovery from a turbulent first half of 2025. The stock had plunged more than 50% by mid-April from its December 2024 peak.

CEO Elon Musk’s government work with the TRUMP administration sparked consumer backlash. Investors worried he was distracted from running Tesla.

The stock regained momentum when Musk stepped back from WHITE House duties. Shares have been climbing ever since.

Tesla’s shift toward AI and robotics has driven the turnaround. Musk announced Tesla began testing unoccupied self-driving cars in Austin this week. That’s a major step toward launching the robotaxi service.

The company started its robotaxi pilot in Austin in June. It expanded to San Francisco in July.

Musk plans to enter Phoenix and Las Vegas next year. He’s banking on autonomous vehicles to transform Tesla’s business.

The company unveiled its Robovan and Cybercab in late 2024. Musk predicted fully autonomous Teslas would operate in Texas and California by the end of 2025.

He also showcased the Optimus humanoid robot. Musk called it “the biggest product ever.”

Wall Street’s View on Tesla’s AI Play

Wedbush analyst Dan Ives thinks 2026 will be a “game changer” for Tesla. He expects Cybercab volume production to begin by May.

Ives predicts federal regulators will help accelerate the robotaxi rollout. He believes Tesla stock could hit $800 by the end of next year, up more than 60% from current levels.

“We believe the march to an AI driven valuation for TSLA over the next 6-9 months has now begun,” Ives wrote.

Most Wall Street analysts are more cautious. The average price target sits below $400, suggesting potential downside.

The autonomous technology Optimism has offset weak EV sales. Sales jumped to a record last quarter as buyers rushed to claim federal tax credits before they expired.

But Tesla is expected to deliver fewer cars this year than in 2024. First and second quarter deliveries dropped sharply.

Shareholders approved a compensation plan for Musk last month valued at up to $1 trillion. That eased concerns about his commitment to Tesla given his other ventures.

Despite the Wednesday selloff, Tesla stock remains up 16% year to date. S&P 500 and Dow Jones futures were up 0.5% and 0.2% respectively on Thursday morning.