Tesla (TSLA) stock gained another 10% on Monday, sending shares to their highest level since early 2022 and giving the company a market cap north of $1.1 trillion amid optimism the EV maker will be a big winner under the Trump administration.

"We are raising our price target on Tesla to $400 from $300 as we believe the Trump White House win will be a gamechanger for the autonomous and AI story for Tesla and Musk over the coming years," wrote Wedbush analysts led by Dan Ives in a new note to clients on Monday.

Wedbush sees AI and autonomous driving as an opportunity worth $1 trillion to the company's value, writing that, "under a Trump White House these key initiatives will get fast tracked as the federal regulatory spiderweb that Musk & Co. have encountered over the past few years around FSD/autonomous clears significantly under a new Trump era."

Tesla CEO Elon Musk is one of the business world's biggest supporters of Donald Trump and was a key surrogate for the President-elect in the final months of the campaign.

Tesla stock is up nearly 50% since the election, and on Friday Tesla hit its highest closing price in over two years on Friday, topping $1 trillion in market value.

As Yahoo Finance's Pras Subramanian reported, because of Musk’s support of Trump's candidacy, the President-elect has even promised Musk a position in his administration, suggesting he could head a commission to boost government efficiency.

Meanwhile, hedge funds clinging to bets against the stock have lost massively over the past week.

On Monday, Tesla shorts were down $8.72 billion in mark-to-market losses since November 4th, according to data analytics firm S3 Partners. Before the post-election rally, Tesla stock had lagged the S&P 500 and trailed each of its "Magnificent Seven" peers year-to-date.

"We expect continued short covering in TSLA stock due to the rally induced short squeeze which will force out many of the 2.4 million shares we saw shorted over the last month," S3 Partners head of predictive analytics Ihor Dusaniwsky told Yahoo Finance.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

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