Wall Street analysts posted mixed views on Tesla’s fourth-quarter results and plans to more than double capital expenditures to over $20 billion this year.
Bulls viewing the investment as confirmation of the company’s AI ambitions and bears warning of elevated risk and potential cash burn.
As of press time, Tesla shares were trading 3.7% lower at $415.81, down 7% from the $450.45 peak reached after the results were released on Wednesday.
Of the 11 analysts who published notes following the earnings release, five maintained bullish ratings with price targets implying upside from Wednesday’s closing price of $431.46.
Five analysts held neutral positions, with three seeing downside and two seeing modest upside. One analyst maintained a Sell rating with an 18% downside target.
The planned capex represents a 135% increase from the $8.5 billion invested in 2025 and marks the largest annual capital outlay in the company’s history.
The announcement came as Tesla reported its first annual revenue decline since going public, with full-year sales falling 3% to $94.8 billion.
Fourth-Quarter Results
Fourth-quarter results showed total revenues of $24.9 billion, down 3% year over year. Total automotive revenues fell 11% to $17.7 billion, while energy generation and storage revenue jumped 25% to $3.8 billion. Services and other revenue rose 18% to $3.4 billion.
Tesla posted fourth-quarter GAAP earnings per share of $0.24, down 60% year over year, and non-GAAP EPS of $0.50, down 17%.
Net income attributable to common stockholders was $840 million, a 61% decline from the prior year period.
Gross margin improved to 20.1%, up 386 basis points year over year, while operating margin came in at 5.7%, down 50 basis points.
Tesla ended the quarter with $44.1 billion in cash, cash equivalents, and investments, up 21% from a year earlier. Free cash flow was $1.4 billion, down 30% year over year.
Analyst Ratings Summary
Among the 11 analysts covering Tesla following the fourth-quarter results, five maintained bullish ratings — Stifel, TD Cowen, Piper Sandler, Baird, and RBC Capital — with price targets ranging from $500 to $548, implying upside of 16% to 27%.
Five analysts remained on the sidelines with Hold, Neutral, or Equalweight ratings — Goldman Sachs, Needham, Truist, Jefferies, and Barclays — with price targets ranging from $300 to $438.
UBS maintained its Sell rating with a $352 price target despite raising its target, implying 18% downside.
The wide range of price targets — from $300 at Jefferies to $548 at Baird — reflects the divergence in views on Tesla‘s AI pivot and its ability to execute on ambitious robotaxi and robotics goals while navigating expected cash burn.
Bulls See AI Catalysts Ahead
Stifel analyst Stephen Gengaro reiterated a Buy rating and $508 price target, implying 18% upside from Wednesday’s close, saying the fourth-quarter results and commentary are likely positive for Tesla shares.
“We reiterate our belief that TSLA remains very well positioned, and FSD and Robotaxi will be critical value drivers,” Gengaro wrote.
The analyst highlighted revenue, gross profit, and operating income exceeding projections, continued progress of robotaxis in Austin and the Bay Area with target expansion to seven additional metro areas in the first half of 2026.
Gengaro noted that automotive margins excluding credits beat expectations, and said Tesla expects to develop its supply chain for Optimus 3 and begin production by the end of 2026.
The analyst also flagged that FSD moving to a monthly subscription “likely weighs on automotive margin short term but creates long-term recurring revenue stream.”
TD Cowen analyst Itay Michaeli raised his price target to $519 from $509 while maintaining a Buy rating, implying 20% upside.
The analyst argued that the resilient fourth-quarter results set a foundation for improving sentiment.
“We continue to like the risk/reward here — we believe Tesla‘s resilient Q4 results will ultimately set a foundation for sentiment improvement with the company entering a period that could see meaningful AV/Robotics catalysts (Cybercab, RoboTaxi expansion, FSD progress, Optimus V3) amid a backdrop of generally skeptical sentiment,” Michaeli wrote.
The analyst said Cybercab could allow Tesla to expand robotaxi operations in less penetrated rideshare markets at an estimated $0.30 cost per mile.
“Our model suggesting that attaining ~5% penetration in less dense MSAs alone could generate ~$100bln of revenue,” Michaeli wrote. “We also view AV success as a key catalyst for boosting vehicle demand this year.”
Baird analyst Ben Kallo reiterated an Outperform rating and $548 price target, implying 27% upside, viewing the capex increase positively.
“The call was highlighted by a doubling of capex outlook for 2026 y/y to over $20B. Importantly, they signaled an elevated level for the intermediate term, as it builds out the physical AI value chain,” Kallo wrote.
The analyst noted that potential investments in solar and chip fabs, which CEO Elon Musk described as critical for Tesla‘s supply chain security, are not included in the 2026 capex guidance.
“These ambitions mark the beginning of a new chapter for TSLA which we view positively,” Kallo added.
RBC Capital analyst Tom Narayan reiterated an Outperform rating and $500 price target, implying 16% upside, saying the capex step-up is expected and will facilitate Tesla‘s path toward innovation.
“The robotaxi launch schedule is a welcome detail for investors keen on concrete timetables. Finally, while Tesla is focused on its humanoid path, we could envision a scenario where the company could make a strategic pivot to specialized form factors to satisfy demand,” Narayan wrote.
The analyst noted that Tesla will use its $44 billion of cash on hand to fund the investment but also borrow from banks “especially given the recurring nature of cash flows coming from businesses like robotaxi.”
Piper Sandler analyst Alexander Potter reiterated an Overweight rating and $500 price target, implying 16% upside, calling the fourth-quarter call “fascinating.”
“During the webcast, Tesla formalized its ambitious new direction: the company is burning the boats, pinning its future on autonomous cars and robots,” Potter wrote. “The Model S and Model X will be discontinued, and the vacated floorspace will be repurposed for building humanoids.”
The analyst highlighted Tesla‘s new disclosures, including a focus on FSD subscriptions and an outlook calling for doubling the robotaxi fleet each month from a current base of 500 units. Tesla targets launching robotaxis in seven new cities in the next five months.
“The 2026 capex budget of $20B is ~2x higher than normal, and represents 44% of Tesla‘s cash balance,” Potter wrote. “The stock may be flattish after-hours, but if even half of these ambitions are realized, we think TSLA will be higher by year-end.”
Bears Warn of Cash Burn, Elevated Risk
UBS analyst Joseph Spak raised his price target to $352 from $307 but maintained a Sell rating, implying 18% downside from Wednesday’s close. The analyst warned that Tesla‘s risk profile has increased with the aggressive spending plans.
“Over the past few years, Tesla has shifted the narrative to becoming a physical AI company, and pivoting from an EV company. However, they weren’t spending like an AI company, averaging ~$10bn in capex over the past 3 years,” Spak wrote.
“That number is set to double to ~$20bn in 2026 (prior indication was >$11bn) which we view will put TSLA into cash burning mode (we forecast $6bn cash burn in 2026),” he added.
The analyst said the spending does not include a $2 billion investment in xAI and warned that Tesla is not done spending.
“Musk indicated a semi Terra-fab (which could cost an initial $30bn) and solar fab could be in the works,” Spak wrote. “Meanwhile, the profit driver of the company today, auto, had a strong margin quarter but is likely to have limited growth (ending production of the Model S/X the cherry on top for the EV to AI transition).”
“Big dreams require big risk, and the timing of when the payoff might be for some of these ventures becomes critically important,” the analyst added.
Spak said UBS believes “the auto value embedded in TSLA stock continues to come down, meaning that the value for the AI ventures goes even higher as the stock rises. We believe TSLA is in a period where they need to grow into that valuation before further value appreciation occurs.”
Goldman Sachs analyst Mark Delaney lowered his price target to $405 from $420 while maintaining a Neutral rating, implying 6% downside, citing expectations for negative free cash flow this year.
“While a large part of Tesla‘s implied valuation has long been tied to future profits associated with its AI related efforts (e.g. FSD, robotaxis, robotics), we believe success in these areas will be even more in focus going forward given the company’s planned increase in capex,” Delaney wrote.
The analyst acknowledged Tesla‘s progress on FSD, noting that some users have reported driving thousands of miles between critical interventions on version 14, which has received positive reviews from Barron’s and MotorTrend.
“We continue to believe that Tesla will grow its broader AI related businesses over time (with the company having competitive strengths in our view including with its data access, engineering capabilities, and vertical integration/cost), we also expect competition to moderate the degree of profit growth,” Delaney wrote.
The analyst pointed to Waymo’s plans to more than double its locations this year and Nvidia’s announcement at CES to open source its Alpamayo model and tools as competitive threats.
“Tesla is also facing a high degree of competition internationally in EVs, especially from Chinese auto OEMs (and increasingly beyond the China market),” Delaney added.
Model S and X Discontinuation Marks Symbolic Shift
Barclays analyst Dan Levy reiterated an Equalweight rating and $360 price target, implying 17% downside, calling the Model S and X discontinuation more important from a symbolic standpoint than a financial one.
“Tesla kicked off its 4Q EPS call with an announcement that on the surface was of little meaning – Tesla will be ending production of Models S/X by next quarter. Model S/X has been of little relevance for quite some time – in 2025 it accounted for only 2% of Tesla‘s volume, with what many saw as little differentiation vs Models 3/Y,” Levy wrote.
“Yet we’d argue that the announcement was more important from a symbolic standpoint. When Tesla launched Model S in 2012, it was Tesla‘s initial foray into high-volume vehicle production, and eventually paving the way for more affordable models in Models 3/Y – establishing Tesla as an incredibly disruptive force in the automotive industry,” the analyst added.
“While Automotive remains Tesla‘s core business for the time being, we believe the end of S/X marks the symbolic baton pass for Tesla from Automotive and into Physical AI, with autonomy (Robotaxi, FSD) and bots to be Tesla‘s core growth focus for the years to come,” Levy wrote.
“In case it wasn’t clear before, it’s more than abundantly clear now that Tesla is not an auto company,” the analyst added before warning that the elevated CapEx creates a “wild contrast” for Tesla stock.
“With this capex push and amid fundamentals which are soft for now, Tesla will likely for now be running with negative free cash flow, with the balance sheet to help with funding. And yet even with negative FCF, Tesla stock is likely to remain frothy, currently trading at 200x ’26 PE multiple – an indication of how little near-term fundamentals matter,” Levy wrote.
“As a reminder, Tesla is one of only two companies in the world with a USD $100bn+ valuation and a PE ratio of 150x or more (with the other being Palantir),” the analyst added.
Valuation Already Reflects Success
Needham analyst Chris Pierce reiterated a Hold rating, arguing that Tesla‘s valuation already reflects a high degree of success in autonomy and robotics.
“TSLA continues to execute with discipline across its core auto business while making tangible progress on longer dated AI initiatives, with surprisingly robust auto margins helped by geographic leverage, early autonomy milestones and clearer intent around Optimus helping to incrementally de-risk the long term narrative,” Pierce wrote.
“That said, we think valuation already reflects a high degree of success across autonomy and robotics, while monetization and economics for these businesses remain largely ahead of realization with competition intensifying,” the analyst added.
“At current prices, we see enthusiasm as more priced in than not, keeping the risk/reward balanced at these levels despite improving momentum,” Pierce wrote.
Jefferies analyst Philippe Houchois reiterated a Hold rating and $300 price target, implying 30% downside, noting the vague outlook despite healthy margin beats.
“Tesla delivered its most interesting earnings call in many quarters. Healthy beat on core auto margin and cash. Outlook vague and low in numbers, except a whopping $20bn capex for 2026 and beyond across 6 units,” Houchois wrote.
The analyst warned that multiple launch milestones are likely to be missed and could undermine confidence in earnings.
“Funding may become a topic despite a $44bn cash pile. Announced investment in xAI suggests meeting supercompensation targets may rely on Musk-related corporate deals,” Houchois added.
Truist Securities analyst William Stein lowered his price target marginally to $438 from $439 while maintaining a Hold rating, implying 2% upside.
“Big changes this earnings include (1) TSLA is stopping production of Model S/X; (2) it is making significant investments in 6 new production lines and training hardware, more than doubling capex from $8.5B to $20B this year, with more spend to come, and (3) it is establishing AI-related operational bogeys for CY26,” Stein wrote.
“We believe these will make auto deliver data decreasingly relevant. The fundamental changes are positive, in our view, but our updated DCF barely budges to $438 (from $439), so we stay on the sidelines,” the analyst added.
