Tesla Inc. (TSLA) shares took a breather Thursday, pulling back after an impressive rally sparked by President Donald Trump's announcement of tax breaks for EV buyers. The retreat comes even as Elon Musk continues making headlines with a massive new AI venture.
Trump's Tax Break for Tesla Buyers
During a speech Wednesday at the U.S.-Saudi investment forum, Trump announced that "middle-income people" would get interest deductions on auto loans as part of his administration's Big, Beautiful Bill Act. He specifically name-dropped Tesla, saying, "We're giving them a deduction on the interest if they buy a nice Tesla car," before adding that Musk was "lucky" to have him around.
Here's how the deduction works: taxpayers can write off up to $10,000 per year in interest on auto loans through 2028, provided the vehicle was assembled in the United States. The benefit targets middle-income earners, with singles making up to $100,000 annually and couples earning up to $200,000 qualifying for the full deduction. Once you cross that $100,000 threshold, the deductible amount decreases by $200 for every additional $1,000 in income.
Musk's Saudi AI Megaproject
The same day, Musk and Nvidia (NVDA) CEO Jensen Huang took the stage at the investment forum to announce ambitious plans for a new AI-focused data center. The facility will be operated by Humain, a company backed by Saudi Arabia's Public Investment Fund, and will house approximately 600,000 Nvidia graphics processing units—making it one of the largest AI data centers on the planet.
Musk confirmed that xAI, his AI startup, will be the first customer tapping into this new infrastructure. The data center will run on a massive 500 megawatts of Nvidia chips. Ever the showman, Musk joked about future expansion possibilities, quipping that scaling the facility 1,000 times over "would be eight bazillion, trillion dollars."
The timing of the Saudi deal coincided with Nvidia's strong earnings report, adding more fuel to investor excitement around AI infrastructure.
What Analysts Are Saying
Despite Thursday's pullback, analyst sentiment toward Tesla remains solidly positive. The electric vehicle maker has seen a wave of target price increases and rating upgrades recently. Stifel maintained its 'Buy' rating on November 17 while bumping its price target from $483 to $508. Wedbush has been even more bullish, reiterating an 'Outperform' rating with a $600 target on both November 7 and November 5.
Other notable moves include Bank of America Securities maintaining a 'Neutral' rating but significantly raising its target from $341 to $471 on October 29. Freedom Capital Markets upgraded Tesla from 'Sell' to 'Hold' on October 24, simultaneously lifting its target from $338 to $406. These shifts suggest analysts are taking a more optimistic view of Tesla's financial trajectory.
Price Action: Tesla shares were down 1.38% at $398.35 at the time of publication Thursday.