Tesla Signs Major Arizona Power Deal – Gary Black Expects TSLA Stock To Fall Below $300

• Project Sterling includes 509 MW of solar power generation and a 360 MW battery storage system with 1.4 GWh of energy capacity.
• Gary Black expects Tesla’s stock to fall below $300 in the coming weeks over valuation concerns.
• RBC Capital lowered Tesla’s price target to $480 from $500 but maintained an ‘Outperform’ rating, according to The Fly.

Tesla (TSLA) on Tuesday signed a long-term agreement to purchase electricity from a KKR-backed solar-and-battery facility in Arizona, marking a notable departure from its usual approach of avoiding major long-term power purchase agreements.

Tesla is set to buy electricity from Project Sterling, a large solar and battery storage project which includes 509 MW of solar power generation and a 360 MW battery storage system with 1.4 GWh of energy capacity. ContourGlobal developed the project.

Under the deal, Tesla will buy 90% of the project’s power output, marking the first agreement between the two companies. Financial terms of the agreement were not disclosed. Agreements such as this one typically run for 10 to 15 years, according to a Bloomberg report.

Project Sterling is expected to begin operations in 2028, with the facility expected to connect to the Western Area Power Administration grid, giving it access to electricity markets in Arizona and California.

TSLA’s Move Beyond Local Utilities

The deal stands out because Tesla has generally relied on local utilities and grid power rather than entering into major long-term power purchase agreements. However, such contracts are becoming increasingly important as electricity demand rises across the United States, driven by rapid growth in data centers and AI-related infrastructure. 

Tesla has continued to ramp spending across Robotaxi, Cybercab, Optimus, AI compute, chips, solar manufacturing and factory capacity.

According to a United Nations report published earlier this year, data centers are expected to account for over 20% of the increase in electricity demand by 2030. In the U.S., power used for AI-related data processing could exceed the combined electricity consumption of the aluminum, steel, cement, and chemical industries by the end of the decade.

Gary Black Says TSLA Stock To Dip Below $300

Meanwhile, Future Fund LLC Managing Partner Gary Black stated on Tuesday that he expects Tesla’s stock to fall below $300 in the coming weeks over valuation concerns.

In a post on X, Black stated that the stock’s FY 26 price-to-earnings ratio in excess of 175x “seems excessive as AI-related valuations continue to unravel.”

At the time of writing, TSLA stock was down 1.3%. The stock is on track for a fifth straight day of losses.

Last week, Tesla posted adjusted second quarter earnings of $0.33 a share, missing Wall Street expectations of $0.54, though revenue came in at $28.24 billion, ahead of estimates.

Separately, RBC Capital analyst Tom Narayan lowered Tesla’s price target to $480 from $500 but maintained an ‘Outperform’ rating, according to The Fly. This represents around 56% potential upside from current levels.

What Retail Thinks About TSLA

Retail sentiment surrounding TSLA on Stocktwits turned ‘bearish’ from ‘neutral’ a day earlier, amid ‘high’ message volumes.

One user said Tesla is positioning itself to benefit from that growing demand for power.

Another user stated that TSLA could fall to as low as $250.

The stock has slumped more than 29% so far this year, making it the worst-performing MAG 7 stock this year.

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