Wall Street is giving off mixed signals about Tesla Inc. Analysts are increasingly skeptical of the electric-vehicle maker’s earnings potential this year, but their expectations for the company’s stock price keep climbing.
“Tesla is truly unique in capital markets,” said Nicholas Colas, co-founder at DataTrek Research. “It is much more like a VC-funded startup than public equity. As long as the vision is bold enough, the valuation levers off that rather than earnings and cash flows.”
Over the past 12 months, the average forecast for Tesla’s 2026 net income has tumbled 56% from $14.1 billion to $6.1 billion as of Monday’s close. Yet, during the same period, analysts have raised their average 12-month price target for Tesla shares to $409.49 from $337.99. The stock trades around $433 as of 9:46 a.m. Tuesday, which is well above Wall Street’s expectations for a year from now.
The dynamic is “very unusual,” Colas said, since higher price targets typically go hand-in-hand with improving earnings estimates, not dimming expectations. The company reports its fourth-quarter and full-year results on Wednesday. A Tesla representative didn’t respond to a request for comment.
Tesla’s stock, which raced to an all-time high in December before retreating some, trades at more than 195 times its expected earnings over the next 12 months as of Monday’s close. That’s by far the most-expensive valuation among the Magnificent Seven tech giants, which combined trade for around 29 times anticipated earnings. By comparison, its next closest peers in the group are Apple Inc., Alphabet Inc., Microsoft Corp. and Amazon.com Inc., all of which are priced between 25 and 30 times forward earnings.
The shares also have the second-highest multiple in the entire S&P 500 Index, trailing only takeover target Warner Bros. Discovery Inc. and well ahead of number three Palantir Technologies Inc.
“If the stock was trading closer to peers, we might be inclined to suggest the risk/reward is appealing,” HSBC analyst Mike Tyndall wrote in a note to clients earlier this month. However, the other Mag Seven members have “higher margins, generate more cash,” and yet are priced at a significant discount to Tesla, he added.
To get a sense of how much of an outlier the company has become, consider that every member of the Magnificent Seven has seen their price target rise over the past year — but only Tesla’s profit estimates have deteriorated simultaneously.
The amount of hope baked into Tesla’s share price has become a point of controversy among investors. Clearly the stock isn’t moving on the outlook for EV sales. Rather, it’s primarily about Chief Executive Officer Elon Musk’s vision for humanoid robots and driverless cars. While those are certainly promising areas for future growth, they’re also businesses where Tesla has yet to demonstrate real profitability.
Tesla’s long-term potential will be in focus when Musk speaks to Wall Street on Wednesday afternoon following the company’s earnings report. The disparity between its value and performance means the CEO’s guidance is more important than ever. As the company’s fundamentals weaken and car sales drop, analysts want to see how much progress it’s making in the push to create a thriving business around autonomous vehicles and robots.
“Deliveries barely matter anymore,” Piper Sandler analyst Alexander Potter wrote in a note to clients earlier this month after Tesla’s fourth-quarter vehicle sales disappointed. “Instead, TSLA’s performance in 2026 should be driven by progress in AI and robotics.”
Potter has an overweight rating on Tesla shares and a target price of $500, which implies a gain of about 15% over the next 12 months. But “without new disclosure, we fear investors may refocus on declining near-term estimates,” Potter wrote.
This tension is at the core of the debate over the stock’s inflated valuation. The “generational growth opportunities” in robotics, autonomy and energy storage make Tesla’s price worth paying, according to Canaccord Genuity analyst George Gianarikas.
In fact, Tesla’s radical shift in strategy also makes it the rare case where anticipated earnings often do deviate sharply from the stock’s price targets, said Jonestrading chief market strategist Michael O’Rourke.
“Analysts are willing to value the company on the businesses that are not commercial yet,” he said. “In short, they would rather bet on Elon Musk than bet against him.”
Fitzgerald writes for Bloomberg.