While Tesla’s stock has surged back to become one of the market’s hottest performers, Microsoft has struggled to keep pace with other tech giants. The electric car maker has reclaimed its position among the market’s hottest megacap stocks, while Microsoft ranks as the worst performer in the Elite 8 group since July 1.
Tesla’s rally stems from several factors that have excited investors. The company’s robotaxi plans and updates on humanoid robots have enhanced confidence. Elon Musk’s $1 billion stock purchase and a new compensation proposal have kept investors engaged. The company also has stronger delivery forecasts and better expectations in China. The Federal Reserve’s recent rate cut makes car loans cheaper for buyers, which could help Tesla’s sales. Analysts have identified key breakout points for the stock around $458 to $523, suggesting further upside potential. Mizuho analyst Vijay Rakesh raised Tesla’s price target from $375 to $450 due to a stronger-than-expected 2026 outlook.
Tesla’s robotaxi plans, Musk’s billion-dollar stock purchase, and cheaper car loans from Fed rate cuts fuel investor excitement.
Microsoft has gained less than 5% since July, while Alphabet has jumped 45% in the same period. The Elite 8 includes the Magnificent Seven tech stocks plus Broadcom. Microsoft’s slow performance comes despite strong June quarter results and positive guidance for its Azure cloud service.
Several issues weigh on Microsoft’s stock. Investors worry about the company’s long-term relationship with OpenAI. There’s also concern about U.S. visa rules that could affect Microsoft and other large tech companies that depend on global workers. The stock already trades at high prices that assume strong growth in cloud services and AI adoption.
The two stocks show different risk patterns. Tesla’s stock swings more wildly with volatility at 12.06%, compared to Microsoft’s 4.64%. Microsoft offers steadier risk-adjusted returns with a Sharpe ratio of 0.96 versus Tesla’s 0.60. The stocks move together often, with a correlation of 0.72.
Both companies face challenges ahead. Tesla needs to prove its self-driving technology works and that it can make money in the competitive EV market. However, the company continues to grapple with technical issues, as Tesla vehicles experience significant battery drain when parked outside due to background systems and temperature extremes. If the company misses delivery targets or delays its robotaxi development, the stock could fall sharply.
Microsoft expects to announce Azure developments in November. But if Azure growth slows or AI products don’t make money quickly enough, the stock could suffer. Both stocks trade at high valuations that assume everything goes right.