This article first appeared on GuruFocus.

Tesla (NASDAQ:TSLA) shares rose about 1.5% on Thursday after UBS raised its price target on the electric vehicle maker to $442 from $364, reflecting a higher long-term valuation tied to the company’s artificial intelligence and robotics initiatives.

UBS analyst Joseph Spak said the revised target is driven by Tesla’s potential beyond its automotive business. The update places greater value on the company’s investments in physical AI, including its Optimus humanoid robot program, Full Self-Driving technology and Dojo, the in-house supercomputer used to train AI models.

Physical AI refers to artificial intelligence that interacts with real-world…