Why Tesla Stock Is Soaring Today

Tesla (NASDAQ: TSLA) stock is revving higher in Thursday's trading. The electric vehicle (EV) leader's share price was up 6.4% as of 11 a.m. ET amid a 0.5% gain for the S&P 500 index and a 1% gain for the Nasdaq Composite index.

Tesla stock is gaining ground following a recent report suggesting that the company could be on track to receive a $400 million contract through the U.S. State Department. However, subsequent developments are casting doubt on whether the deal will actually go through. The stock is also getting a boost from bullish analyst coverage.

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Is Tesla getting a $400 million State contract for armored vehicles?

Late yesterday, reports emerged that Tesla would receive a $400 million contract to provide armored EVs for the State Department. The department's 2025 procurement forecast had a segment titled "Armored Electric Vehicles" and listed $400 million for Tesla as one of its planned expenses in the category.

However, it now looks like the contract may not materialize. For starters, the State Department amended its spending forecast -- renaming the "Armored Electric Vehicles" section "Armored Car Services" and removing Tesla from the list of companies that are slated to see deals through the department. Notably, Tesla was the only one of the companies listed in the section to have its forecast deal removed.

CEO Elon Musk also followed up with commentary on the matter, saying that there was no $400 million Armored Tesla contract in the works. But while Musk has poured water on the deal, some investors may be betting that the EV leader will wind up securing other State contracts.

Tesla stock climbs on positive analyst coverage

In a note published yesterday, Wedbush Analyst Daniel Ives reiterated his outperform rating and one-year price target of $550 per share for Tesla stock. As of this writing, Ives' price forecast suggests additional upside of roughly 54%.

Ives expects that the close relationship between Musk and the Trump administration will help pave the way for the EV company to see huge benefits connected to federal autonomous vehicle programs. The analyst expects that this dynamic alone will unlock over $1 trillion in valuation gains for Tesla in the coming years. He also sees robotics and artificial intelligence (AI) as key growth catalysts for the company.

With today's gains, Tesla's valuation has been pushed up to roughly $1.15 trillion. That looks like a potentially risky valuation given that growth for the company's EVs in the commercial market has stalled recently, but the tech leader has some other big growth drivers on the horizon that could help it beat expectations.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.