MW Elon Musk once called his questions 'boneheaded.' What Wall Street is losing as this clear-eyed analyst retires.

By Therese Poletti

With the incoming pro-business Trump administration, Wall Street needs people willing to ask hard questions and look into whether there's substance behind bold corporate predictions

Tesla Inc. Chief Executive Elon Musk accused him of asking "boring, boneheaded questions" in an earnings call seven years ago. But in fact, Bernstein's Toni Sacconaghi was a rare, clear-headed analyst whose willingness to press management teams will be a big loss for Wall Street.

Sacconaghi said on Thursday in a note to clients that he would be retiring after 26 years at Bernstein, where he covered the biggest tech-hardware companies - the likes of Apple Inc. $(AAPL)$, IBM Corp. $(IBM)$, HP Inc. $(HPQ)$, Hewlett Packard Enterprise Co. $(HPE)$ and Dell Technologies Inc. $(DELL)$ - and electric-vehicle maker Tesla Inc. $(TSLA)$ Before joining Bernstein in 1998 in the early days of the tech boom, he was a consultant at McKinsey & Co.

Known for his thorough reports and sharp questions on company earnings calls, Sacconaghi was a breath of fresh air in contrast to the often sycophantic tone from many analysts on Wall Street.

"I think my career was defined less by any big call, but by detailed research, objectivity and a willingness to ask the tough question," Sacconaghi told MarketWatch in a text, saying he did not have much else to add.

In the last few years, his bearish stances on Apple and Tesla were contrarian, as both stocks mostly roared in Wall Street's bull market. Fans and bulls of both companies, especially Tesla, rejoiced at the news of his retirement on X, some recalling the infamous moment with Musk.

During Tesla's first-quarter earnings call in 2018, he asked Musk a series of financially oriented questions. After one about capital requirements, Musk rudely dismissed him, saying: "Excuse me. Next. Boring bonehead questions are not cool. Next?"

Tesla bulls have laughed because Sacconaghi's last price target on Tesla was $120 and the stock is now trading around $403, with a valuation of $1.3 trillion.

On Apple, he was early to worry about declining iPhone sales amid the beginnings of an oversaturated iPhone market in 2018. After more than six years at the equivalent of neutral, though, he turned bullish in April 2024. While he missed Apple's big rally in the years before that, shares had gotten off to a sluggish start in 2024 before his upgrade, and the stock is up 36% from the point when he moved to a bullish rating.

Sacconaghi always looked at the underlying fundamentals of companies, and beyond investor enthusiasm for particular stocks. For example, he has been skeptical of Tesla's push into robotaxis, noting that the company's technology is behind current leaders like Alphabet Inc.'s $(GOOG)$ $(GOOGL)$ Waymo, which uses lidar and radar among the sensors in its driverless-car fleet. Tesla doesn't use those, and Musk's plan is that all the data gathered by Tesla's cameras in its current cars on the road, combined with AI, will make its robotaxis even more competitive than Waymo's and Uber Technologies Inc.'s $(UBER)$ driverless cars.

When asked about how he was valuing Tesla on CNBC's Squawk Box in October at the time of its robotaxi launch, Sacconaghi made a case for his valuation. "Tesla's stock embeds, we think, $600 billion beyond the core auto business, much of that ascribed to robotaxis," he said. "So we struggle with that. We absolutely categorically cannot say that Tesla is a leader from a safety and intervention perspective in full self-driving."

Looking much further back, Sacconaghi was early to spot a growth slowdown at the original Hewlett-Packard Co. as the dot-com bust was beginning. He also critiqued some of that company's ill-fated mergers and management upheavals. Last year, he was skeptical of Hewlett Packard Enterprise's planned acquisition of the slow-growing Juniper Networks Inc. $(JNPR)$, noting that HPE should pursue smaller, higher-growth acquisitions the way IBM does.

But it wasn't all bite. Over his career, his written reports were full of thoughtful analysis and details. He was early to see progress at IBM's services and consulting business, and made a contrarian upgrade on the computer giant in 2005, according to Institutional Investor, which ranked him a top U.S. analyst at least 15 times.

While some of Sacconaghi's stock calls didn't always pan out - at least not yet - it's important to have people willing to do deep research and look into whether there's substance behind companies' big predictions.

But in the anticipated pro-business environment of the incoming Trump administration, critical voices are going to be even more necessary than ever. The absence of Sacconaghi, and others like him, on Wall Street will be felt sharply.

-Therese Poletti

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January 17, 2025 18:30 ET (23:30 GMT)

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