Why Tesla stock is climbing over 4% on Monday

Tesla stock TSLA jumped on Monday as investors looked ahead to the company's second-quarter delivery report later this week, while fresh comments from Chief Executive Elon Musk provided an additional boost to sentiment.

The stock rose around 4% in early trading to $396.64, recovering some ground after a difficult week for the electric vehicle maker.

The broader market was also supportive, with the S&P 500 gaining 0.8% and the Dow Jones Industrial Average advancing 0.3%.

Investors are now focused on Tesla's second-quarter delivery figures, scheduled for release on Thursday.

Analysts currently expect Tesla to report deliveries of approximately 405,000 vehicles, up from roughly 384,000 vehicles delivered during the same period a year earlier.

Musk highlights FSD rollout

Part of Monday's rally appeared linked to comments Musk made on social media regarding Tesla's Full Self-Driving technology.

Musk said Tesla had begun rolling out a new version of its Full Self-Driving software for customers using AI3 hardware, the onboard computer platform introduced in 2019.

Newer Tesla vehicles are equipped with AI4 hardware, which was introduced in 2023 and offers significantly greater computing capability.

"Nice work by the [Tesla AI team]!" Musk wrote on X.

"The AI3 computer only has about 15% of the effective memory bandwidth of AI4, so this was a tough challenge," he added.

The update could potentially expand the addressable market for Tesla's Full Self-Driving subscription service by improving functionality for owners of older vehicles.

Tesla currently charges $99 per month for Full Self-Driving, which can perform most driving tasks under driver supervision.

Analysts raise delivery expectations

Wall Street analysts have become increasingly optimistic about Tesla's upcoming delivery results following stronger-than-expected sales data from several key markets.

Morgan Stanley raised its second-quarter delivery forecast to approximately 413,000 vehicles from a prior estimate of roughly 373,000 units.

The firm cited stronger registration trends in Europe and improving demand in China as key drivers behind the upgrade.

According to Morgan Stanley, Europe provided the largest source of upside, with registrations running significantly above year-earlier levels as the region continued recovering from a weaker 2025.

China also showed improving momentum, with domestic sales rebounding in May after two consecutive months of annual declines.

Despite the higher delivery forecast, Morgan Stanley maintained its $415 price target and remained cautious on Tesla's energy storage business, forecasting second-quarter deployments of 11.8 gigawatt-hours compared with Street expectations of roughly 14.3 gigawatt-hours.

Focus shifts beyond vehicle sales

Barclays also raised its delivery expectations and now forecasts approximately 418,000 vehicle deliveries for the quarter.

The brokerage expects European deliveries to reach approximately 90,000 units during the quarter, representing Tesla's strongest regional performance since 2023.

China deliveries are projected at roughly 135,000 vehicles, supported by improving domestic demand and export activity.

Production is expected to reach about 430,000 vehicles during the quarter, while inventory levels remain well below the elevated build seen during the first quarter.

Barclays maintained its Equal Weight rating and $360 price target, while noting that investor attention has increasingly shifted away from Tesla's automotive operations toward its longer-term artificial intelligence initiatives.

The firm said investors remain focused on programs such as Robotaxi, Optimus, and autonomous driving technology, even as stronger vehicle deliveries remain important for generating the cash flow needed to fund those ambitions.