What happened

Shares of Tesla (TSLA -2.76%) continued to rocket higher on Wednesday, rising nearly 9% as of 10:50 a.m. EST. This gain builds on a sharp rise for the electric-car maker's stock on Tuesday, putting shares at $934.

The stock's gain once again is likely driven by an analyst's upgraded 12-month price target for the stock. There has been growing optimism among analysts and investors for Tesla following a year of impressive execution and ahead of the Model Y's launch this quarter. But this analyst is taking a look at the big opportunity for the company beyond electric vehicles.

Tesla solar roof

Image source: Tesla.

So what

On Wednesday, Piper Sandler (PIPR -0.11%) analyst Alexander Potter boosted his 12-month price target on Tesla stock to $928, up from a previous target of $729. In addition, the analyst kept an "overweight" rating, implying he believes the stock will outperform the market. Key to his increased bullishness on the growth stock is his view of the company's energy business, which sells energy storage and solar products.

Potter estimates the addressable market for Tesla's solar roof product at $165 billion annually in the U.S. alone. But even this understates the market for Tesla's energy business since the company sells Powerwall energy storage batteries to complement its solar roofs. Assuming two Powerwalls per house, this product adds $70 billion to the addressable market, Sandler believes.

Now what

Tesla shares have seen astronomical appreciation recently, climbing about 325% over the last six months.

Investors should keep in mind the increased risk of owning the stock at a steeper valuation. As the electric-car maker's shares climb, so too do investors' expectations.