This AI Inventory Simply Turned Wall Road’s Most Controversial Decide for 2026

There are many synthetic intelligence (AI) shares for traders to select from proper now, however one decide that some analysts have began to get bullish on lately is Tesla (NASDAQ: TSLA). The electrical automobile (EV) firm is within the midst of a serious transition to autonomous autos (AVs) and humanoid robots. However Tesla can be a controversial AI decide proper now, given the corporate’s falling gross sales and earnings, rising bills, and costly share worth.

This is why some on Wall Road suppose Tesla is an effective AI decide and why traders could wish to keep away from it for now.

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I wrote a number of months in the past {that a} rising variety of analysts had been changing into bullish on Tesla, partly due to its self-driving automobile ambitions. And following the current launch of Tesla’s fourth-quarter outcomes, it seems the optimism is rising. Wolfe Analysis analyst Emmanuel Rosner stated lately that 2026 might be a “catalyst-rich yr” for Tesla, and that the corporate’s robotaxi income may attain $250 billion by 2035. Different analysts had been optimistic as effectively, with at the very least 17 analysts having a purchase score on Tesla inventory.

A part of the optimism got here from Tesla’s enhancing gross margin, which reached 20.1% within the fourth quarter, the best it has been in two years. Tesla additionally ended 2025 with $44 billion in money and investments, up from 20% in 2024, which is able to assist the corporate put money into increasing its robotaxi service and ramping up manufacturing of its Optimus humanoid robots.

Some rosy perspective is sensible, contemplating AVs may finally be value $1.4 trillion by 2040 and humanoid robotics might be value an estimated $5 trillion by 2050. Sadly, the big dimension of those markets is simply a part of the story.

Whereas Tesla has the potential to faucet into the increasing AV and robotics markets, there are important hurdles for the corporate to beat earlier than I would really feel comfy shopping for the inventory.

For one, Tesla’s gross sales and earnings are declining. The corporate’s income fell by 3% in 2025, its first-ever annual decline, and earnings tumbled 47% yearly to $1.08 per share. The issue for Tesla is that its automobile income fell 10% final yr to $65.5 billion as shopper demand for EVs slowed and Tesla suffered model injury from CEO Elon Musk working the previous Division of Authorities Effectivity.

As well as its falling gross sales and earnings, Tesla is ramping up spending because it transitions to AVs and robotics, with Musk saying on the fourth-quarter earnings name that capital expenditures (capex) would greater than double to $20 billion this yr.

Briefly, whereas Tesla could be pursuing strong long-term alternatives, the corporate’s present monetary image is not nice. Making issues worse, traders are paying a hefty premium in the event that they purchase Tesla’s shares proper now. The inventory has a price-to-earnings ratio of 393, which is much greater than the tech sector’s common P/E ratio of 43.

Till the corporate can show it has turned issues round, I imagine traders are higher off leaving Tesla inventory alone for now.

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Chris Neiger has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Tesla. The Motley Idiot has a disclosure coverage.

This AI Inventory Simply Turned Wall Road’s Most Controversial Decide for 2026 was initially printed by The Motley Idiot