Shares of Tesla fell more than 4% on Wednesday, extending recent weakness as investors weighed near-term fundamental concerns against bullish longer-term projections from Wall Street analysts.
The decline came despite a research note from Wolfe Research, which described the electric vehicle maker as facing a “catalyst-rich year ahead” in 2026.
Wolfe analyst Emmanuel Rosner said he remains tactically constructive on Tesla, even as he acknowledged challenges related to earnings visibility and execution risks.
Wolfe analysts on Tesla stock
In his note, Rosner outlined several potential drivers for Tesla over the coming year.
These include the planned launch of the Optimus humanoid robot in the first quarter, the introduction of the Cybercab in April, expansion into new robotaxi markets, further updates to the company’s Full Self-Driving software, and the opening of a new Megapack battery facility.
Rosner said that while the timing of these initiatives could shift, Tesla’s planned increase in spending reflects strong internal confidence.
He added that Wolfe’s robotaxi model remains a central pillar of its long-term thesis.
The firm projects that Tesla’s autonomous ride-hailing business could generate $250 billion in annual revenue by 2035, based on assumptions of 30% penetration of autonomous vehicles and a 50% market share for Tesla at a rate of $1 per mile.
Under those assumptions, Wolfe estimates that the robotaxi business could support about $2.75 trillion in equity value, or roughly $900 billion on a discounted basis, equivalent to more than $250 per share.
Despite its long-term optimism, Wolfe tempered its outlook following Tesla’s fourth-quarter results and recent regulatory filings.
The firm lowered its 2026 earnings per share forecast to $1.60 from $1.85 and cut its 2027 estimate to $2.17 from $2.37.
Those projections remain below current consensus estimates of $1.99 for 2026 and $2.63 for 2027, reflecting concerns over margins, pricing pressure and investment requirements.
Musk’s AI ambitions in focus
Investor attention has also turned to developments around Tesla Chief Executive Officer Elon Musk’s broader technology empire.
Late Monday, Musk confirmed that his aerospace company, SpaceX, will merge with his artificial intelligence startup xAI.
Following that announcement, markets have a buzz that there is a growing chance Tesla could eventually merge with SpaceX and xAI over the next 18 months.
Analysts at Wedbush Securities echoed that view. Wedbush analyst Dan Ives said Tesla appears to be positioning itself to combine its capabilities with Musk’s other ventures to create what he called a “long-term AI juggernaut.”
“In our view there is a growing chance that Tesla will eventually be merged in some form into SpaceX/xAI over time,” Ives wrote.
“The view is this growing AI ecosystem will focus on Space and Earth together.”
Ives added that Tesla is now “laser focused” on autonomy and robotics, and that increased “cross-pollination” between Tesla and SpaceX is likely in the coming year.
“Musk wants to own and control more of the AI ecosystem and step by step, the holy grail could be combining SpaceX and Tesla over the next 12 to 18 months,” he wrote.
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