Tesla (TSLA -0.30%) has a lot of moving parts. It's not just an electric vehicle (EV) maker. It has a growing energy storage business, a robotics arm, and enough data and artificial intelligence (AI) assets to begin making fully self-driving vehicles later this year.

A busy, vocal, and sometimes controversial CEO also can add to the stock's volatility. The stock has lost 35% so far this year, most of which has come since Tesla reported its fourth-quarter and full-year earnings on Jan. 29.

But one Wall Street analyst thinks the stock has dropped far enough. TD Cowen analyst Itay Michaeli just upgraded that firm's rating on Tesla stock to a "buy" and provided a massive price target increase from $180 to $388 per share, reports Barron's.

Weigh Tesla's risks against potential rewards

To be clear, Michaeli is a new analyst at TD Cowen recently moving from Citigroup. His prior price target at Citi, though, was well below $388 per share. His new rating implies a nearly 50% upside for Tesla shares.

Tesla's EV business has been under pressure. While the company delivered a similar number of units in 2024 versus the previous year, automotive revenue dropped by 6.5%. That's from price cuts and incentives to stem rising competition. Evidence is mounting that sales are slowing, too.

In February, China sales plunged more than 50%, according to the China Passenger Car Association (CPCA). That was the lowest sales month for Tesla in China since July 2022.

Michaeli is looking beyond just EV sales, though. He recognizes ongoing risks, and summed up his position this way: "While there is no shortage of challenges this year ... the list of potential game-changing level catalysts across, EV, autonomous vehicles, and robotics are robust enough to tilt risk/reward favorably."

That's essentially the bottom line for Tesla stock. Investors need to weigh the risks versus potential future rewards from the business. Its robotics and self-driving car aspirations need to pan out to make the stock worth owning.