Tesla earnings are looming, and Wall Street's outlook is mixed as vehicle sales remain in a rut and the company's AI plans continue to take shape.
Analysts said ahead of the Wednesday report that they see challenges ahead for Elon Musk's carmaker, including uncertain EV demand and unclear timelines for some of its major AI projects.
While some firms are bullish on the robotaxi rollout expanding this year, others say the stock has largely priced in the bull case for AI and robotics, leaving little room for disappointment on either front.
Tesla will publish its results after the 4 p.m. closing bell, with its call with analysts set to begin around 5:30 p.m. ET.
UBS: Return from AI projects could be 'further out'
Tesla stock looks like it's already largely priced in the bull case, which relies on the success of the company's robotaxi business and Optimus, Tesla's humanoid robot. But returns for those projects may not be realized in the near future, UBS analysts said.
"So in our view, given a declining valuation for TSLA's EV business, the market is already assigning a higher and higher value to the AI ventures. While the TAM for these ventures may be large, they could also be further out," the bank wrote.
Tesla stock looks like it's already largely priced in the bull case, which relies on the success of the company's robotaxi business and Optimus, Tesla's humanoid robot. But returns for those projects may not be realized in the near future, UBS analysts said.
"So in our view, given a declining valuation for TSLA's EV business, the market is already assigning a higher and higher value to the AI ventures. While the TAM for these ventures may be large, they could also be further out," the bank wrote.
UBS issued a "sell" rating and a $247 price target, implying 43% downside from current levels.
Oppenheimer: Challenges to Robotaxi and Optimus
Tesla's progress on AI has been "slower than anticipated," Oppenheimer said.
The firm pointed to continued progress Tesla would need to make before beginning the production of Optimus, and the expectation that the company will roll out robotaxis in more cities across the US this year.
Tesla's progress on AI has been "slower than anticipated," Oppenheimer said.
The firm pointed to continued progress Tesla would need to make before beginning the production of Optimus, and the expectation that the company will roll out robotaxis in more cities across the US this year.
"We see downside risk to 2026 consensus as we continue to anticipate delays in Robotaxi performance and Optimus ramp in context of a challenging EV demand environment for TSLA," the firm wrote.
Analysts issued a "perform" rating on Tesla and trimmed their fourth-quarter revenue estimates from $24.08 billion to $23.7 billion.
Cantor: Expecting a handful of AI catalysts
Cantor analysts highlighted potential catalysts that could boost Tesla's stock down the line, like the company rolling out full self-driving in China and Europe, expanding its robotaxi presence across the US, and launching Optimus commercially in 2027.
The firm's analysts reiterated its "overweight" rating on the stock and set a $510 price target, implying 17% upside from Tesla's current levels.
Wedbush Securities: Growth potential from AI
Wedbush, a longtime Tesla bull, remains optimistic about Tesla's AI and robotics projects.
The research firm said it believed Tesla could hit a $2 trillion valuation in the next year as the company begins "full scale volume production" of some of its autonomous and robotics products.
Wedbush, a longtime Tesla bull, remains optimistic about Tesla's AI and robotics projects.
The research firm said it believed Tesla could hit a $2 trillion valuation in the next year as the company begins "full scale volume production" of some of its autonomous and robotics products.
"We believe Tesla will own ~70% of the global autonomous market over the next decade as no other company can match the scale and scope of Tesla coupled with its broadening AI footprint," a team led by Dan Ives wrote in a note.
The firm reiterated its "outperform" rating and issued a $600 price target on Tesla, implying 38% upside from current levels.
Wall Street expects Tesla to report Q4 revenue of $25.11 billion
Fourth Quarter
- Adjusted EPS estimate 45c (Bloomberg Consensus)
- EPS estimate 34c
- Revenue estimate $25.11 billion
- Gross margin estimate 17.1%
- Operating income estimate $1.32 billion
- Free cash flow estimate $1.59 billion
- Capital expenditure estimate $2.83 billion
Source: Bloomberg data
