After a long skid that dragged shares below the 10-week moving average, Tesla has popped back onto the Investor's Business Daily Leaderboard, joining fellow Magnificent Seven megacap Nvidia. Now Tesla stock has regained traction as it takes aim at a fresh breakout.
And that is just one reason the electric vehicle and robotaxi maker is back in focus on Wall Street. Strong demand and a budding turnaround in sales and earnings growth offer two more.
Tesla Fuels Strong Growth Estimates Down The Road
Headquartered in Austin, Texas, since 2021, Tesla continues to expand beyond its own vehicles in the still-young EV market.
Tesla is also a key industry player in battery-based energy storage and is developing an artificial intelligence robotics business. Ford Motor, GE Aerospace, and Rivian Automotive have all moved to gain access to the Tesla Supercharger network. That underlines Tesla's influence in the space and opportunities for new, significant revenue streams.
While Tesla has seen slowing earnings and sales growth in recent quarters, and that is expected to continue for the rest of the year, analysts forecast a turnaround in the first and second quarters of 2026.
In the first quarter of next year, Wall Street expects a 73% spike in earnings to 47 cents per share and 20% sales growth to $23.3 billion. For the second quarter of 2026, analysts see Tesla posting 35% earnings growth to 54 cents per share and generating a 12% revenue gain to $25.2 billion.
Since Wall Street tends to have a forward-looking view, such an outlook could bode well for Tesla stock.
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Flashing Signs Of Demand
While Tesla has seen a decline in fund ownership in the last two quarters, more recent signs of demand have emerged.
Tesla sports an A- Accumulation/Distribution Rating and a 1.2 up/down volume ratio.
An impressive 425 funds with an A+ rating from IBD own shares of Tesla. Nvidia stock, however, tops that, with 607 A+ funds reporting a position in the AI juggernaut.
While Tesla stock currently earns a decidedly mediocre 53 Composite Rating out of a best-possible 99, look for that score to rise as shares close in on a breakout.
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Tesla Stock Eyes Breakout As Key Lines Point To Change
Coming out of their long skid, shares of Tesla have tightened up and found support at the 40-week moving average. Budding turnarounds in the 21-day exponential moving average and 50-day line mark two more signs of improving technical strength. Look for the 21-day and 50-day lines to climb back above the longer-term 200-day line to confirm that trend.
As the EV maker shores up support and its chart shows tighter, healthier action, Tesla stock continues to form an early stage flat base with a 367.71 buy point.
To kick off the new week, Tesla rose over 1% Monday as it continues to hold above it 200-day line.
While its relative strength line retreated as the stock tumbled in the first half of this year, it has halted the decline and started to edge higher.
So as the company flashes signs of demand and an improving sales and earnings outlook next year, see if Tesla can energize a new breakout move.
Fellow IBD Leaderboard and Mag 7 member Nvidia continues to trade tightly right around its all-time high.
Meanwhile, the tech-heavy Nasdaq managed to halt a two-day losing streak Monday, ending essentially flat but with a fractional gain. The index remains well above both its 21-day and 50-day lines.
As always, while Tesla eyes a breakout and Nvidia looks to notch yet another record high, investors should keep the principles of risk management in mind following sound rules for how to buys stocks and when to sell.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
