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The average Wall Street forecast for Tesla (TSLA) stock assumed that the share price will decline over the next 12 months.
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Despite gains in other business segments, Tesla’s automotive division revenue fell 11% year over year in Q4 2025.
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Tesla will now be a “show-me” story as the company shifts its focus toward robotics and AI.
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Investors rethink ‘hands off’ investing and decide to start making real money
For Tesla (NASDAQ:TSLA) and its investors, the times are changing rapidly. Although Tesla started out as an electric vehicle (EV) manufacturer first and foremost, CEO Elon Musk now seems to be focused on artificial intelligence (AI) and Optimus robots.
For analysts, commentators, and shareholders, the Tesla stock price predictions vary greatly. For the bulls, a share price of $500 is likely within 12 months; for some disbelievers, it looks like the stock could plummet to $300.
Much of this has to do with Musk’s mysterious character and shifting priorities. Trying to accurately predict where TSLA stock is headed will be challenging. Nevertheless, we can do some fact-finding to help us decide whether it’s wise to own Tesla shares in 2026’s first quarter.
Musk is, figuratively speaking, a lightning rod with a bold vision and controversial ideas. For example, not everyone agrees that robotaxis will be powerful profit makers or that Musk should focus so deeply on robotics.
With the future being somewhat uncertain for Tesla, there’s little to no consensus on Wall Street concerning the 12-month share-price trajectory. Believe it or not, out of 34 analysts, 14 issued a Strong Buy rating on TSLA stock, 17 issued a Hold rating, and 9 issued a Strong Sell rating.
Clearly, opinions among analysts are sharply divided. A quick glance at Wall Street’s Tesla stock price targets only adds to the general feelings of disagreement and confusion.
Sure, TSLA stock has an average price target of $401.24 on Wall Street, but that doesn’t tell the whole story. First of all, consider that this average price prediction represents a decline from the current Tesla share price.
It’s already surprising to see the analyst community, on average, expecting Tesla stock to go down over the next year. Remember, there’s a widespread expectation that interest rates will be brought down in 2026, which ought to benefit an automaker like Tesla.
But again, Musk might not primarily think of Tesla as an automaker anymore. In any case, 12-month TSLA stock price targets have run as high as $500 from RBC Capital Markets analyst Tom Narayan and as low as $350 from DZ Bank analyst Markus Leistner.
Quite possibly, bearish-leaning analysts and investors are feeling blue about Tesla’s recently reported revenue decline. As it turns out, the revenue figures for Tesla’s automotive segment — which was once Musk’s main focus for the company — have been particularly disappointing.
Here’s what you need to know about Tesla’s fourth-quarter 2025 revenue results. For one thing, the company’s total revenue declined 3% year over year to $24.901 billion. Furthermore, analysts expected $25.1 billion in revenue, so the actual result was a miss.
Here’s where it gets even worse. In Q4 2025, Tesla’s automotive segment revenue fell 11% to $17.693 billion. Meanwhile, the company’s energy generation and storage revenue revenue climbed 25% and Tesla’s services and other revenue improved 18%.
Tesla’s automotive division is still its biggest one by far. That’s why it’s a major problem to see the company’s automotive revenue in a state of double-digit decline.
For what it’s worth, Tesla’s adjusted earnings per share (EPS) came in at $0.50, beating Wall Street’s consensus estimate of $0.45 per share. On the other hand, this result still indicates a 17% year-on-year decline.
Going forward, Tesla has a lot of proving to do and should now be considered a “show-me” story. This quarter, Tesla plans to unveil
the Gen 3 version of the Optimus robot lineup, to “include major upgrades from version 2.5.”
Turning to the topic of AI, Tesla is now “building Cortex 2 at Gigafactory Texas to further increase our AI training compute capacity.” Moreover, Tesla plans to “more than double the size of onsite
compute in Texas (in terms of H100 equivalents).”
Along with all of that, the company expects to implement “targeted augmentation to support the rollout of Robotaxi.” No doubt, this is all very exciting if you’re fully on board with Musk’s intended direction for Tesla.
Analysts and investors who envision TSLA stock surging to $500 are likely in agreement with Musk’s vision. In contrast, if someone believes that the Tesla share price will sink to $350, this may be predicated on skepticism of Musk’s judgment.
Tesla’s Q4 2025 earnings release doesn’t emphasize the company’s current and expected financial outlays for all of these new projects. Make no mistake about it: Tesla is taking a big risk as it will have to spend massive amounts of capital to build out its ambitious projects.
Thus, the optimists might feel that these projects will eventually pay for themselves and then some. Yet, the pessimists know that Tesla has to prove that mega-scale robotics and AI spend will be financially rewarding. For now, it’s all up in the air and investors can just exercise caution even if they’re fans of ever-changing Musk and Tesla.
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