XPeng (NYSE:XPEV) has captured attention after delivering another record month in vehicle sales, with October numbers rising 76% year-over-year. This streak, along with advances in AI and robotics, has fueled growing momentum around the stock.

Momentum is clearly building for XPeng, as excitement from new AI and robotics launches and a remarkable streak of record-breaking vehicle deliveries have sent the stock rallying to a three-year high. While the 1-year total shareholder return stands at an impressive 96.3%, recent moves—including a 16% surge ahead of quarterly results and a 15.6% one-month share price return—suggest that investors are increasingly optimistic about its growth trajectory.

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But with shares hovering near all-time highs and growth already factored into analyst targets, investors must ask whether the explosive momentum still leaves room for upside or if the market has already priced in XPeng’s future gains.

Most Popular Narrative: 7.2% Undervalued

XPeng’s widely followed narrative assigns a fair value of $26.95, which is above the last close of $25.01. This suggests analysts see more upside ahead for the stock based on strong future projections and a lower risk rate than before.

XPeng's rapid in-house development and deployment of proprietary AI hardware (Turing AI SoC) and vision-based ADAS are expected to significantly advance its vehicle autonomy and smart cockpit solutions. These developments align with surging consumer demand for intelligent, software-centric vehicles, setting the stage for higher-margin software revenue and enhanced gross and net margins.

Want to know what underpins such a bold valuation? The narrative hinges on explosive future growth, driven by new technology rollouts and margin breakthroughs. What numbers power this bullish scenario? Find out what analysts are projecting behind the scenes.

Result: Fair Value of $26.95 (UNDERVALUED)

However, persistent net losses or increased competitive pressure in China could quickly dampen XPeng’s prospects and challenge its bullish narrative.

Another View: Higher Sales Ratio Clouds the Picture

Looking at XPeng through the lens of its price-to-sales ratio gives a different perspective. The current ratio is 2.8x, which is significantly higher than the peer average (1.5x), the US Auto industry average (1x), and its own fair ratio of 2.1x. This gap suggests the stock may be priced for perfection, increasing valuation risk if growth expectations falter. Could this premium signal a crowded trade, or is there more upside left?

Build Your Own XPeng Narrative

If the current viewpoints do not fully align with your own or if you prefer your own take, you can shape your own XPeng narrative quickly, in just a few minutes. Do it your way

A good starting point is our analysis highlighting 1 key reward investors are optimistic about regarding XPeng.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.