It’s been really tough to find a middle ground when it comes to investing in Tesla (TSLA) stock. On one hand, the core business is clearly under pressure—sales are slipping, tax credits are fading, and competition in the EV space keeps heating up, clouding the outlook for the next few quarters (maybe even years). On the other hand, the bullish thesis almost ignores all that, shifting focus entirely to robotaxis, FSD, automation, and robotics. With the stock trading at triple-digit multiples, this setup is enough to make any value investor nervous.
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But given how disruptive Tesla’s long-term vision could be, it’s hard to argue that if it all plays out, it won’t be a game-changer—especially in ride-sharing and physical AI, where Tesla is arguably the most advanced name when it comes to scale. And that’s precisely why I see Tesla stock as a long-term Buy.
If you believe missing Tesla means missing a once-in-a-generation opportunity, owning the stock with a long-term lens makes sense. The valuation may look stretched, fueled by bold projections—but if Tesla delivers, even the bulls might look cautious in hindsight. The real question: how long can investors wait for fundamentals to catch up with the hype? Let’s dig into that…
Tesla Faces a Critical Inflection Point
It’s hard to deny that Tesla’s core business—still centered on electric vehicles (EVs)—is showing signs of weakness. On one hand, there are clear headwinds: EV tax credits have dried up, the auto sector is increasingly crowded with competition, consumer spending is softening across the board, and Tesla’s brand is taking hits as some buyers boycott the company over Elon Musk’s political stance.
On the other hand, these issues are showing up clearly in the numbers. Tesla’s latest Q2 earnings badly missed expectations: revenue dropped 12% year-over-year, and free cash flow is shrinking fast as the company ramps up investments in areas tied to its future. Regulatory credit revenue also collapsed 51% year-over-year, contributing to a steep 57% drop in operating income. To make matters worse, the man of the moment, Elon Musk himself, warned that the next few quarters could be “rough,” citing external tariffs and political pressures.
And here’s the big issue: for a company trading at 183x forward earnings—arguably priced for perfection, even by tech standards—investors are buying the stock based on hope, not certainty, and definitely not on a clear path for short-term improvement.
That said, those hopes are pretty solid and widely shared, even if the scale and timing are still unclear. At the very least, I still see Tesla as a rare example of a triple-digit multiple stock that has a believable shot at transforming numerous industries at once—automotive, software, energy, and robotics, to name but a few.
The Underrated Power of Tesla’s Physical AI Push
Many long-term Tesla bulls argue that the company’s current valuation is only marginally tied to the EV business. The real driver, they say, lies in AI, automation, Full Self-Driving (FSD), and robotics. As Dan Ives of Wedbush—a Tesla perma-bull—puts it, AI still isn’t fully reflected in sell-side spreadsheets simply because of how disruptive the tech could be. Tesla isn’t just building software—it’s working on physical AI. And the company seems to be making tangible progress, especially with supervised self-driving, which could start delivering tangible results sooner than expected.
One key point is that Elon Musk recently stated Tesla doesn’t yet have approval for supervised self-driving in Europe or China. But he believes that once approval comes, it could meaningfully boost sales in both regions—Europe and China being the world’s two largest auto markets today.
For now, Tesla is rolling out FSD upgrades in Austin, Texas, before scaling globally. And this version is reportedly a significant leap forward in performance and user experience. If Tesla successfully expands FSD worldwide, it could mark a turning point—transforming the company’s profile from just a carmaker into more of a software-as-a-service (SaaS) business. That shift would fundamentally change the financial narrative.
So, even though it’s extremely tough to model the true impact of technologies like physical AI and robotics—especially in terms of growth, cost efficiency, and margin accretion—the approval and scaling of FSD in major markets could unlock new revenue streams and become a major catalyst for the stock.
The Long Wait for Tesla’s Robotaxi and Robotics to Impact Financials
Even in more optimistic scenarios, the market doesn’t expect Tesla’s robotaxi business to become commercially meaningful before 2026. So, realistically, it’s only from 2027–2028 onward—assuming regulatory hurdles are cleared—that we could see a fleet of hundreds of thousands of robotaxis in operation. Tesla could potentially run its own ride-hailing network (à la Uber (UBER)), which might finally bring a more material boost to both revenue and margins.
As for Optimus, Tesla’s humanoid robot project—still in the prototype stage and described by Musk as the company’s “most important product ever”—2025 to 2026 could see a moderate chance of these robots performing basic tasks in Tesla factories. This leads me to believe that the probability of initial B2B sales kicking off between 2027 and 2028 looks low to medium. That means that only by around 2030 might Optimus start making a real impact on Tesla’s financials.
That said, EVs and Energy are still expected to carry the weight of Tesla’s P&L for at least the next few years. But when we look at the current stock price and analyst consensus, expectations are sky-high: annual EPS is projected to jump from $1.72 today to $9.46 over the next five years—a 40.6% CAGR—while yearly revenues are expected to more than double, from $93.05 billion in 2025 to $207.7 billion by 2030, implying a CAGR of 17.4%.
And while it’s hard to quantify the disruptive power of physical AI on a spreadsheet, those kinds of growth assumptions still look wildly optimistic—especially given the lingering uncertainty around basic building blocks like a scalable business model for Optimus, a clear regulatory and technical roadmap for robotaxis, and even reliable FSD adoption and monetization data outside the U.S.
Is Tesla (TSLA) a Buy, Hold, or Sell?
Right now, there are as many skeptics as there are bulls when it comes to TSLA stock. Of the 37 analysts covering the stock over the past three months, 14 are bullish, 15 are neutral, and eight are bearish. TSLA’s average stock price target is $310.84, which implies ~3% downside over the coming twelve months.
The Fear of Missing Out on Tesla’s Next Big Leap
Tesla’s track record of delivering high-quality vehicles, its massive investments in technology, and its ability to scale—led by a CEO with both the vision and influence to advance bold transformational goals —arguably make a strong case for the stock to trade at a sizable premium. Yes, much of the tech excitement is still based on investor hopes rather than real-world adoption. But the fear of missing out (FOMO) on what could be a once-in-a-lifetime breakthrough—robotaxis and robotics taking off at scale—keeps Tesla positioned as the leading bet on applied AI worldwide.
As much as the bears point to weak recent results and softer quarters ahead, it’s hard to bet against disruptive technology where traditional valuation metrics often fall short. That said, I still see Tesla as a Buy—but only for those willing (and able) to play the long game.