Tesla stock reverses early losses as investors await AI, robotaxi progress

Tesla shares reversed earlier losses on Tuesday and were trading in the green as investors focused on the electric-vehicle maker's artificial intelligence ambitions and potential robotaxi and humanoid robot businesses.

Tesla shares entered Tuesday down about 25% year to date and had gained only around 1% over the previous 12 months, reflecting a prolonged period of limited gains as investors await evidence of progress in the company's AI-related businesses.

Investors focus on Tesla's robotaxi and AI plans

Tesla launched an AI-trained robotaxi service in June 2025, although its rollout across several cities has been gradual.

The company is also preparing to introduce the Cybercab, a steering-wheel-less robotaxi, according to The Information.

Tesla has separately been developing Optimus, an AI-trained humanoid robot, although investors have had limited recent visibility into its capabilities.

Baird analyst Ben Kallo said investor attention remains focused primarily on Tesla's robots and robotaxis rather than its traditional automotive and energy operations.

He described the current environment as one in which fundamentals have been "extremely de-emphasized."

Kallo rates Tesla Buy and has a $475 price target.

According to FactSet, 45% of analysts covering Tesla rate the shares Buy, below the typical 55% to 60% Buy-rating ratio for S&P 500 companies.

The average analyst price target is around $374, down from a March peak of approximately $415.

GLJ Research continues to see downside

GLJ Research reiterated its Sell rating and maintained a $24.86 price target, implying a 92% downside from current price levels.

GLJ Research analyst Gordon Johnson highlighted Tesla's 1.4% operating margin in the second quarter, negative $1.1 billion in free cash flow and a decline in energy gross margin to 20.4%.

Johnson also raised concerns about Tesla’s robotaxi ambitions, arguing that the company’s Full Self-Driving (FSD) performance does not yet support the expectations built into the stock’s valuation.

He cited tracked data showing FSD v14 on Tesla’s HW4 system disengaging about every 40 miles.

The data covers 865 vehicles, with 18 active in the past week.

Johnson also pointed to 22 collisions reported in National Highway Traffic Safety Administration filings over the past 12 months, saying the figures raise questions about whether Tesla’s autonomous driving technology is ready to justify its current valuation.

Those concerns extend to the Cybercab, Tesla’s planned steering-wheel-free robotaxi.

While Johnson expects the planned Austin event to attract attention, he does not view the event itself as evidence that the vehicle is ready for widespread use.

Johnson also questioned Tesla’s valuation estimates for its future businesses.

He cited management estimates of roughly $20 trillion for Optimus, the company’s humanoid robot business, and about $5 trillion for autonomy and other businesses.

SpaceX merger remains a potential catalyst

Investors are also watching speculation about a potential combination between Tesla and SpaceX, both led by Elon Musk.

Gary Black, managing partner at The Future Fund, believes there is a high probability of a Tesla-SpaceX merger this year but remains cautious about Tesla's valuation.

He expects SpaceX could potentially make an all-stock offer for Tesla at a roughly 20% premium.

Black said such a transaction could create strategic synergies and simplify Musk's responsibilities across the two companies. However, he also warned that existing Tesla shareholders could face substantial dilution in an all-stock transaction.

Black estimates Tesla is trading at roughly 195 times 2026 earnings and argues that its valuation leaves limited room for attractive returns even with strong long-term earnings growth.