After rallying through the latter three quarters of 2025, Tesla (NASDAQ: TSLA) stock entered a strong downturn with the start of January and is, with its press time price of $406.62, down 9.58% year-to-date (YTD).
TSLA stock price YTD chart. Source: FinboldThe adverse business side news has, however, not dissuaded TSLA bulls, nor prevented Elon Musk from continuing to tout his electric vehicle (EV) maker’s long-discussed pivot into a proper artificial intelligence (AI) and robotics company.
Ultimately, between the bearish developments and bullish promises, deciding if Tesla stock is a ‘Buy,’ ‘Sell,’ or ‘Hold’ in 2026 can be difficult, and Finbold examined the situation in detail to find the answer.
Wall Street analysts set Tesla stock price target for 2026
The uncertainty and measured bearishness are also evident in Wall Street analysts’ overall ratings of Tesla stock. On average, TSLA shares are considered a ‘Hold,’ and are expected to fall to $393.51 in the coming 12 months.
Wall Street’s average rating of Tesla shares. Source: TipRanksOut of the three revisions issued in February, two – by Philip Securities and JPMorgan (NYSE: JPM) – position the equity as a ‘Sell,’ with the former seeing a drop to $215 as likely and the latter to $145.
Bulls did, however, get something of an institutional respite in the form of RBC Capital rating Tesla stock as a ‘Buy’ with a $500 12-month price target.
Why Tesla stock isn’t a ‘Buy’ in 2026
Right from the get-go, recent EV industry and AI sector developments paint Tesla stock as a ‘Hold’ at best.
Elon Musk’s car company recorded an annual decline in deliveries in 2025 compared to 2024, and despite the company’s fourth-quarter (Q4) earnings beating analyst expectations in terms of revenue and earnings per share (EPS), they revealed a yearly sales drop from $97.7 billion to $94.8 billion.
January vehicle shipments in Europe also demonstrated the downtrend is sticky, as the figure in Norway fell 88% in Norway, while France recorded just 661 registrations despite a population of 69 million.
Similarly, the greatly-hyped Cybertruck has been underperforming severely as the initial annual delivery forecast estimated as many as 250,000 of them would be shipped each year, and the actual figure is in the 20,000 to 40,000 range.
The broader electric vehicle market paints a similarly dire picture, considering Tesla’s biggest competitor, BYD, itself recorded a 30% drop in sales of new energy vehicles (NEV) within a year.
Tesla stock unlikely to see a rally from AI pivot in 2026
Tesla’s hoped-for future core business – artificial intelligence – is also witnessing an industry-wide deterioration in early 2026.
Specifically, diminishing margins and a slowdown in the still very real growth showcased in the latest big tech earnings reports appear to have meshed poorly with the long-standing fears about an AI bubble.
The most dramatic examples of the trend came from Microsoft (NASDAQ: MSFT) and Advanced Micro Devices (NASDAQ: AMD) since both companies reported rather strong results and still suffered substantial immediate stock market drops.
Cracks in the sector are also showing in the form of data center order cancellations amidst growing public resistance, generally skeptical public attitudes toward the technology, and the massive distance between AI company revenue and financial commitments.
The contrarian bull case for Tesla stock in 2026
Although the early February situation can be described as dire, there is still some room for a contrarian bullish play. While Elon Musk’s record with promises is patchy, there is little doubt his firm is working on a series of new technologies, most visible through the implementation of autonomous driving – FSD.
Similarly, Tesla’s pivot from a one-time purchase to a $99 per month subscription model could eventually turn profitable.
Indeed, even with the 2025 deliveries of a relatively modest 1.6 million, FSD becoming popular enough that every new Tesla owner desires access could generate nearly $160 million in monthly and some $1.9 billion in annual revenue.
Why ‘the great X rollup’ could be bullish for TSLA shares
Other recent moves hint that a long-standing complaint among Musk backers – that he is simply managing too many companies – appears to finally be getting addressed.
The latest merger deal between SpaceX and xAI effectively means that three of the billionaire’s companies – once X is accounted for – have been rolled into one.
While it is unlikely Tesla would get involved in the consolidation, as it would mean a rollup of a public and a private company, despite the rampant speculation, it does reduce the administrative load.
It is noteworthy, however, that the SpaceX-xAI deal is likely part of the plans to take the space company public later in 2026.
Still, even the mergers leave some room for concern since they are, arguably, financial machinations for largely unknown ends that boil down to Elon Musk selling the companies he already owned to himself.
Featured image via Shutterstock
Source: https://finbold.com/tesla-tsla-stock-analysis-buy-sell-or-hold-in-2026/
