MW As Tesla doubles down on AI, this analyst says its stock has gotten harder to recommend

By William Gavin

Tesla's stock valuation is increasingly linked to AI initiatives around humanoid robots and robotaxis that aren't bringing in revenue - for now

Tesla's Optimus humanoid robot could eventually be worth 80% of Tesla's value, according to CEO Elon Musk. But for now, it's a "zero," says Truist Securities.

Tesla has made it clear its future lies in artificial intelligence. But one analyst says it's "difficult" to recommend that investors go all-in on the stock, mainly because Tesla has a lot of fine-tuning to do.

"We continue to see the vast majority of [Tesla's] future (and even current)value in the development of physical AI tech," Truist Securities analyst William Stein said in a new note to investors. "Yet, all of these projects are quite unproven."

Stein, who reiterated a hold rating on Tesla's stock, estimates that just 22% of Tesla's $(TSLA)$ valuation is related to its revenue-generating automotive and energy businesses. Meanwhile, the AI products that investors are more interested in are a "long way off" and generate little revenue.

Tesla's Full Self-Driving advanced driver-assistance system has been available for years in the U.S. and is at the core of the company's robotaxi plans. But as of October, only about 12% of Tesla's fleet had the service, which in the U.S. is offered as either an $8,000 one-time payment or as a $99 monthly subscription.

Although Tesla says using its software is much safer than relying on human drivers alone, regulators have repeatedly opened up investigations into the technology. Tesla has also been accused of overstating the software's capabilities and has been sued over incidents in which the technology was said to be involved.

Stein said that Truist's own tests last month showed that FSD didn't perform as intended, although he noted that Tesla has been working on improvements. But Tesla will need the software to work "flawlessly" if it wants to scale its eventual autonomous ride-hailing service, he added.

Tesla currently offers robotaxi rides only in Austin, Texas, and in California's San Francisco Bay Area. For now, the company uses Model Y SUVs equipped with FSD and overseen by a safety driver.

However, the company plans to expand to another five U.S. cities, to take the drivers out of Austin, and to scale its existing fleet to at least 1,500 vehicles by the end of the year, according to CEO Elon Musk. Eventually, it also plans to replace its SUVs with a designated robotaxi, the Cybercab, which is set to enter production next April.

But there are several factors that can impede Tesla's expansion efforts, including regulatory approval, which can vary by state or municipality. Furthermore, Tesla will have to compete with a number of rivals, such as Alphabet's $(GOOGL)$ Waymo.

Stein is also concerned about the development of Optimus, Tesla's line of humanoid robots, which Musk has said could eventually account for 80% of Tesla's value and "eliminate poverty." Tesla plans to eventually sell the robots for both commercial and residential use.

Musk has said investors can expect a demonstration of the third-generation Optimus in early 2026. Production is also set to begin near the end of next year, according to Musk.

"While it's a zero today, if we expect this will eventually be a general purpose robot combining human-like dexterity with super-human intelligence, it's quite easy to adopt a view that Optimus could sell millions per year for $30k each," Stein wrote.

-William Gavin

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November 11, 2025 12:33 ET (17:33 GMT)

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