Here are the Factors that Lifted Tesla (TSLA) in Q3

Baron Funds, an investment management company, released its “Baron Focused Growth Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The Fund delivered strong results in the third quarter, appreciating 4.83% (Institutional Shares); however, the performance underperformed the Russell 2500 Growth Index’s (the Benchmark) 10.73% gain. The fund's underperformance stemmed from concerns over a slowdown in economic growth affecting the fund’s more economically sensitive Consumer Discretionary stocks. Furthermore, the rise in competitive pressures has adversely affected the valuations of a few of its holdings. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Baron Focused Growth Fund highlighted stocks such as Tesla, Inc. (NASDAQ:TSLA). Tesla, Inc. (NASDAQ:TSLA) designs, develops, manufactures, leases, and sells electric vehicles, as well as energy generation and storage systems. The one-month return of Tesla, Inc. (NASDAQ:TSLA) was 6.09%, and its shares gained 55.63% of their value over the last 52 weeks. On November 5, 2025, Tesla, Inc. (NASDAQ:TSLA) stock closed at $462.07 per share, with a market capitalization of $1.537 trillion.

Baron Focused Growth Fund stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its third quarter 2025 investor letter:

"Tesla, Inc. (NASDAQ:TSLA) designs, manufactures, and sells fully electric vehicles, related software and components, solar products, and energy storage solutions. Shares rose during the quarter due to three key catalysts. First, Tesla’s core automotive business is showing renewed strength, with expectations for rising third-quarter delivery volumes across major markets following an enthusiastic consumer response to a new Model Y variant in China. Second, investor confidence in the company's long-term vision and in Elon Musk’s leadership was reinforced by a newly proposed CEO compensation package and nearly $1 billion in personal share purchases by Musk. Finally, Tesla’s AI initiatives continue to advance rapidly, highlighted by the Austin robotaxi network’s expansion from 20 to over 170 square miles since its June 2025 launch and plans for rollouts to additional cities. The upcoming Full Self-Driving Version 14 release is also expected to deliver a major leap in capability for the company’s consumer-owned fleet, while humanoid robot production is anticipated next year as Tesla finalizes its latest Optimus design."

Tesla, Inc. (NASDAQ:TSLA) is in the 23rd position on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 115 hedge fund portfolios held Tesla, Inc. (NASDAQ:TSLA) at the end of the second quarter, up from 104 in the previous quarter. While we acknowledge the potential of Tesla, Inc. (NASDAQ:TSLA) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Tesla, Inc. (NASDAQ:TSLA) and shared the list of stocks everyone’s discussing amid latest earnings seasons. Rowan Street Capital initiated a position in Tesla, Inc. (NASDAQ:TSLA) in 2025. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.