What happened

Shares of electric vehicle company Tesla (TSLA -2.03%) jumped sharply on Monday, climbing as much as 4.5%. As of 12:30 p.m. EDT today, the stock was up 4%.

The stock's gain was likely fueled primarily by bullish commentary from New Street analyst Pierre Ferragu. 

A Tesla Model Y with a stand-up paddle board attached to its roof.

Tesla's Model Y. Image source: Tesla.

So what

Following Tesla's AI Day last week, Ferragu is more confident about the company's artificial intelligence product development, noting that the presentation made New Street more comfortable with its bullish view. More specifically, he believes the growth stock will deserve a price-to-earnings multiple of 50 to 100 in the years to come thanks to the company's advanced technology.

Though Tesla has a P/E multiple of 373 today, analysts expect the automaker's earnings per share to grow at an average annual compound rate of about 52% over the next five years.

The analyst has a $900 12-month price target on the stock. 

Now what

Tesla has guided for an average annual growth rate in vehicle deliveries of about 50% in the upcoming years, without specifying when it expects growth to slow. And management says it expects significant operating margin expansion. These two factors would easily lead to 50%-plus EPS growth.

If Tesla is right about its optimistic outlook and Ferragu is right about Tesla being able to command P/E ratios of 50 to 100 five to 10 years from now, then today's prices for Tesla stock could be a good buying opportunity. But investors should keep in mind that there's a lot that could go wrong with such bullish assumptions, from competitive challenges to potential production and supply issues and other unforeseen detours.