Despite a continued decline in electric vehicle sales across major global markets, Tesla's stock price is approaching its historical high. Investors have looked beyond short-term performance, focusing instead on the future potential of its artificial intelligence businesses, such as autonomous taxis.
The analyst stated, 'The market seems to be looking beyond this quarter, and so are we.' Currently, $Tesla (TSLA.US)$ is facing the prospect of a second consecutive year of annual sales decline.
Despite Tesla's electric vehicle sales expected to fall short of projections once again, its stock price remains near record highs as investors and analysts focus on future growth driven by artificial intelligence.
Data released by industry organizations on Tuesday showed that Tesla's sales in the EU as of November 30 fell nearly 39% compared to the same period last year. As of November, deliveries in China declined more than 8%, while its 2025 sales in the U.S. are projected to drop by 9%.
According to the consensus estimate from FactSet, Tesla is expected to report fourth-quarter vehicle sales of 449,000 units, with annual electric vehicle deliveries reaching approximately 1.6 million units. This indicates the company is heading toward a second consecutive year of declining sales.
George Gianarikas, an analyst at Canaccord Genuity, lowered his forecast for Tesla's fourth-quarter electric vehicle sales from 470,000 units to about 427,000 units on Monday. However, he raised the target share price from $482 to $551 and reiterated a 'buy' rating for the stock.
George Gianarikas wrote, 'Given Tesla's recent stock price strength, the market seems to be looking beyond this quarter, and so do we.'
The stock hit a record high of $498.83 intraday on Monday, closing at $488.73, before falling 0.7% on Tuesday.
Although Gianarikas believes Tesla has rebound potential in the electric vehicle space, much of his and the market’s focus remains on artificial intelligence, particularly robotaxis. Dan Ives, a bullish Tesla analyst at Wedbush, recently stated that the company could reach a market value of $3 trillion by 2027 based on its robotics and AI initiatives, nearly doubling from its current valuation of around $1.6 trillion.
Deutsche Bank analysts wrote in a recent note to investors, 'However, perhaps more importantly, the narrative surrounding robotaxis remains strong.' They also lowered their forecasts for Tesla's electric vehicle sales.
Tesla plans to roll out a fully autonomous ride-hailing network across the United States to compete with $Alphabet-A (GOOGL.US)$ 's Waymo and $Uber Technologies (UBER.US)$ Technologies. The company is also developing a custom robotaxi, which is expected to enter production next year.
Over the past few months, the company has been operating a limited ride-hailing service in Austin, Texas, and the San Francisco Bay Area. Tesla has begun testing driverless autonomous rides in Austin, with the goal of providing fully autonomous rides by the end of this month.
Tesla also plans to expand its ride-hailing service to several other U.S. cities by the end of this year and increase the size of its fleet in Austin. However, progress has been slower than hoped by individuals such as George Gianarikas, and there is only about one week left until 2026.
Morningstar analyst Seth Goldstein believes that the market has assigned an excessively high valuation to the robotaxi business, noting that it will take many years for the business to fully develop. “Tesla is trading at a much higher price than what we consider its fair value,” Goldstein said, assigning the stock a rating equivalent to 'sell' with a target price of $300, implying a potential decline of approximately 39% from current levels.
In addition to robotaxis, Tesla is also developing humanoid robots and custom artificial intelligence chips to power its technology and data centers. Both the robots and chips are expected to enter production in 2026.
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Editor/Doris