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Shares of Tesla Inc (Nasdaq: TSLA) may finally be running out of steam now at least for the near term, says Adam Jonas – a senior Morgan Stanley analyst.

Tesla stock has gone too far, too fast

On Thursday, the longtime Tesla bull downgraded the electric vehicles company to “equal weight” and announced a $250 price target that suggests about a 5.0% downside from here.

The Morgan Stanley analyst recommended that investors move to the sidelines now primarily because the Tesla stock has gone too far, too fast.

While the team has defended the Tesla OW rating all year, I did not see this 111% YTD rally coming.

His call arrives only a day after Elon Musk – the Chief Executive of Tesla Inc said he was ready to make a significant investment in India “as soon as humanly possible”.

Tesla stock is a notable A.I. beneficiary

Jonas attributed the year-to-date rally in Tesla stock at least partially to the focus on artificial intelligence.

In his research note, the analyst dubbed it also an A.I. company but said the related upside is already factored into the share price. Tesla Inc has not confirmed if it’s done cutting prices on key vehicles either.

All in all, he sees material revisions to the downside for its earnings forecasts ahead. Earlier this week, Barclays also downgraded the EV giant and said:

While we aren’t surprised that the stock has participated in the rally, we believe it is prudent to move the sidelines.

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