06:32 AM EST, 12/16/2024 (MT Newswires) -- Tesla (TSLA) could reach a market capitalization of $2 trillion by the end of 2025 as the company's autonomous driving vision takes shape, according to Wedbush Securities.

Donald Trump's return to the White House is expected to be a "total game changer" for the electric vehicle maker's autonomous driving and artificial intelligence opportunity over the coming years, the brokerage said in a Sunday client note. Tesla's AI and autonomous opportunity is worth at least $1 trillion, Wedbush said. It believes these initiatives "will now get fast tracked" under Trump's reign amid possibly easier regulatory conditions.

Tesla Chief Executive Elon Musk was a key campaigner for President-elect Donald Trump in the 2024 presidential election.

"The $1 trillion of AI valuation will start to get unlocked in the Tesla story," Wedbush analysts led by Daniel Ives wrote in the note. "We believe the march to a $2 trillion valuation for (Tesla) over the next 12 to 18 months has now begun in our view with (full self-driving) and autonomous penetration of Tesla's installed base and the launch of Cybercab representing the golden goose."

The brokerage projects the company's full self-driving, or FSD, penetration could increase to more than 50% and change its financial model and margins going forward. Wedbush continues to view Tesla as the most "undervalued AI play in the market" and said a "regulatory friendly" Trump administration is expected to help unlock autonomous and AI value for the company's stock.

Wedbush also forecasts strong delivery demand for Tesla in its key China market. Regarding Trump's proposed elevated tariffs on China, the brokerage believes that Musk will likely have a "very big role" in the new administration and be heavily involved in the China tariff discussions.

"We anticipate some carve outs for both Tesla and Apple (AAPL) on the China tariff front," according to Ives.

Wedbush maintained its outperform rating on Tesla's stock and lifted its 12-month price target to $515 from $400. The brokerage's bull-case price target for Tesla stock is $650 for 2025.