Elon Musk’s Tesla ( TSLA ) has come a long way, but the development has also created a new hurdle for investors. The company can now be seen either as an electric vehicle (EV) giant that is currently facing some challenges, or as an artificial intelligence (AI)-driven technology company that is increasingly focused on robotics, autonomy and robotics. Adding to this debate, Musk once again made bold claims about Tesla’s future.
Recently, the CEO said that his company could be among the first to develop artificial general intelligence (AGI) and “probably be the first to build it in human/atom form,” underscoring his strong belief in Tesla’s long-term AI ambitions. This claim is particularly noteworthy because AGI is widely seen as one of the ultimate goals of AI. It refers to a hypothetical form of AI capable of understanding, learning, and performing virtually any intellectual task that a human can, potentially matching or even exceeding human intelligence.
Such an advanced humanoid system would likely be a step or two ahead of what Tesla is currently expected to introduce with Optimus Gen 3, a humanoid robot designed to handle industrial and domestic tasks using Tesla’s fully self-driving-style AI stack. With Musk doubling down on Tesla’s ambitions in AI and robotics, investors are increasingly weighing the company’s current EV challenges against its potentially transformative AI future. Given this background, is now the right time to buy TSLA stock?
Founded in 2003, Austin-based Tesla has grown from a small EV startup to one of the most closely followed companies in global markets. The company built its reputation by challenging the traditional auto industry with its EVs, battery innovations, and clean energy solutions. Yet the Tesla story today extends beyond electric cars.
The company is devoting significant resources into AI, autonomous driving systems, robotics, and robotic networks. In doing so, Tesla appears to be moving away from the traditional automotive image and instead wants to establish itself as a leader in physical AI, robotics, and large-scale energy infrastructure. This strategic shift also changes the way investors and analysts talk about the company.
Although many Wall Street analysts still judge Tesla through the automaker’s traditional lens, looking closely at quarterly vehicle production and delivery numbers, the focus around the company is gradually shifting. Much attention is now focused on the next phase of Tesla’s growth, including the potential mass production of the CyberCab, the future deployment of the Optimus humanoid robot, and the rapid expansion of its energy storage business.
However, even with this progressive growth narrative, Tesla is not immune to challenges. The company recently reported a decline in annual sales for the first time, as competition in the EV market continues, particularly from Chinese automakers, and growth in the EV segment is slowing. And, the latest registration data also highlights Tesla’s mixed performance across Europe.
Last week, Electric collected vehicle registration data from 15 regions in the region, including France, England, Germany, Portugal, and others. In total, Tesla recorded 17,425 registrations in February, marking a 10% year-over-year (YOY) increase. The report also noted that Tesla posted strong registration numbers in Portugal, Spain, Germany and France. But not all markets showed the same momentum, as the UK, the Netherlands, Denmark and Sweden reported sales declines.
At the same time, the competition is intensifying. Tesla’s Chinese rival BYD Co. Ltd (BYDDF) reported a massive 165% increase in European registrations in January, indicating how aggressively the automaker is expanding its presence in the region. Despite these pressures, Tesla remains one of the most valuable companies in the market, currently having a market capitalization of about $1.49 trillion.
Year to date in 2026, TSLA shares have fallen 13.23%, lagging behind the broader S&P 500 Index ($SPX), which has fallen just 1.75% during the same period. However, the long-term picture still looks very impressive. Over the past year, Tesla stock is up 48.56%, comfortably outperforming the broader market’s 16.55% gain over the same time frame.
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Tesla’s fourth-quarter results for fiscal 2025, released in late January 2026, highlighted a company in transition. While the core auto business has shown signs of slowing, Tesla’s energy and AI-related segments continue to rise. During the quarter, total revenue reached $24.90 billion, reflecting a 3% YoY decline, while adjusted earnings per share fell 17% to $0.50.
Also, the period marked the third consecutive quarter of declining revenue, and notably, full-year 2025 revenue declined for the first time in Tesla’s history. Even so, the results still beat Wall Street expectations, which had forecast $24.78 billion in revenue and $0.45 a share in earnings. Most of the weakness came from the automotive side of the business. Tesla’s flagship segment has faced declining demand as competition intensifies in global EV markets.
As a result, vehicle revenue fell 11% to $17.7 billion, while total vehicle deliveries fell 16% to 418,227 units in the quarter. In contrast, several other parts of Tesla’s business continue to grow at a healthy pace. The company’s energy generation and storage division posted strong growth, rising 25% YOY to $3.84 billion, compared to $3.06 billion in the same quarter last year. Meanwhile, services and other segments rose 18% to $3.37 billion from $2.85 billion last year.
In addition, Tesla delivered a significant improvement in profitability, reporting its highest gross margin in two years at 20.1%, up from 16.3% in the year-ago quarter, suggesting better operating efficiency even as its automotive segment faces pressure. With the EV business facing headwinds, CEO Elon Musk has increasingly focused on Tesla’s next wave of growth.
During the earnings call, CFO Vibhu Taneja told investors to expect about $20 billion in capital expenditures this year, aimed at building new manufacturing facilities and expanding investments in Optimus as well as AI computing infrastructure. Meanwhile, Tesla continues to expand its product roadmap with an emphasis on scaling production, improving cost efficiency, and unlocking future revenue opportunities associated with AI software.
According to the company, the Cybercab, Tesla Semi, and Megapack 3 are all expected to begin volume production in 2026, while the initial production lines for the Optimus humanoid robot are currently being installed, laying the groundwork for its eventual mass production rollout.
Even as Musk continues to make bold claims about AGI, Wall Street’s stance on Tesla remains cautious. Overall, the stock has a consensus “Hold” rating, reflecting the divided view among analysts. Out of 43 analysts covering the company, 15 give the stock a “strong buy” rating, while two give it a “moderate buy”. At the same time, 17 analysts prefer to stick with the “Hold” rating, and nine remain strongly bullish, assigning “Strong Sell”.
An average price target of $408.36 implies a relatively modest upside of 4.9% from current levels. However, the most optimistic forecast on the Street stands at $600, suggesting the stock could potentially rise as much as 54.1% if Tesla’s long-term growth story pans out as expected.
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At the date of publication, Anushka Mukherjee had no position (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
