- Tesla stock's underperformance is epitomised by a move below the psychological $400 level, which could prove difficult to recapture
- Hope of successful negotiations between United States and Iran has brought confidence in the market
- The biggest propulsion in the coming months could ultimately be the $25 billion Terafab project which could revolutionise AI computing
On Monday, a single post on Truth Social triggered a significant market reaction, moving trillions in assets within minutes. Shortly after 7 a.m. ET, President Trump announced in capital letters that the U.S. and Iran had engaged in productive talks toward “a complete and total resolution” of hostilities in the Middle East. This statement led to oil prices dropping by over 13%, Treasury yields declining, and traders signaling a strong opening for U.S. stocks.
By market close, the Dow Jones Industrial Average had increased by 631 points, the S&P 500 rose by 1.15%, and the Nasdaq Composite gained 1.38%. Among the prominent stocks known as the Magnificent 7, Tesla (NASDAQ: TSLA) notably outperformed the rest.
Why Tesla Outran the Pack
Tesla ended the day Monday at $380.83, marking a rise of 3.50% as volume hit 72.6 million shares, well beyond the recent three-month average of 61.3 million. Though talk in the broader market centers on improved outlook tied to Iran, that piece alone doesn’t capture everything in play.
The key catalyst for Tesla was Elon Musk’s announcement of the Terafab project, which has the potential to significantly impact Tesla’s stock and the broader AI industry. Tesla and SpaceX revealed plans for a $25 billion chip fabrication plant in Austin, Texas.
According to Musk, the facility will produce one terawatt of computing power annually, a scale far exceeding any existing semiconductor facilities. This project is expected to deliver AI computing capacity that surpasses the current global output, which is roughly 20 gigawatts per year.
Can Tesla Stock Price Reclaim $400 Before Q1 Ends?
With only a week left in the first quarter, the quest for $400 is a race against time. The market consensus suggests that if the five-day deadline for peace talks yields a concrete agreement, the momentum could easily push TSLA past the $400 mark.
However, getting back to $400 so fast would require consistent follow-through in the short term. If oil prices stay low and there are no new escalations, the peace-talk narrative could keep the rally going. In a realistic base case, the stock will test $390–$395 this week. $400 is only possible if there is very strong momentum.
What Are the Risks?
Despite the upbeat Terafab news, skepticism is warranted. Tesla’s automotive segment reported declining sales for the second year in a row as of 2025. Additionally, Tesla’s CFO has noted that the full costs associated with the Terafab project have not yet been factored into the company’s already substantial capital expenditure plan, which exceeds $20 billion for 2026. This represents a significant financial commitment that the market’s recent rally did not fully address.
Regulatory concerns around Tesla’s Full Self-Driving technology, along with margin pressures resulting from pricing strategies, also add complexity to Tesla’s outlook. While geopolitical developments provided a boost, underlying operational challenges remain the key factors investors need to monitor in the coming quarter.
Tesla Stock Price Forecast
Tesla stock price pivots at $387 and it will need to decisively go above that level to secure the upside momentum. The next key barrier will be the 200-day SMA level at $394, and if the stock translates that into a support, it could form the foundation to target $400. A slide below the $380 mark will indicate a takeover by sellers, with the first key support likely to come at the $372 zone, and the second one at year-to-date lows of $364.
Tesla stock daily chart showing key levels of support and resistance on March 24, 2026. Created on Tradingview
President Trump’s announcement of productive US-Iran talks and a five-day pause on strikes eased fears of wider conflict, sending oil lower and lifting risk assets across indexes
In addition to the Middle East de-escalation news, the Terafab AI chip factory announcement gave Tesla-specific momentum, driving above-average trading volume as investors bet on its long-term AI transformation.
It requires roughly a 5% gain in under six trading days. Achieving this depends on continued geopolitical calm and the market’s acceptance of Terafab’s prospects, both of which carry uncertainties.
