Tesla is shifting its focus from vehicles to artificial intelligence and robotics, highlighted by its decision to stop producing Model S and X to convert factory space for its Optimus humanoid robot. This comes as the company reports its first annual sales decline, with automotive revenue down 11%. The strategic pivot is generating optimism on Wall Street about long-term growth, though some analysts remain skeptical about the financial viability of the robotics venture.
Tesla is pivoting its focus toward artificial intelligence and robotics, including its Optimus robot, a move investors are watching closely. This shift accompanies a 3% year-over-year revenue decline and an 11% drop in automotive revenue, marking the company’s first-ever annual sales decrease.
The automaker announced it will end production of its long-running Model S and X to convert its Fremont factory for manufacturing the Optimus robots. This decision reinforces the trend of major technology companies aggressively moving resources into AI development.
Tesla stock had risen approximately 24% over the past year entering Wednesday trading, valuing the firm at around $1.8 trillion including CEO Elon Musk‘s vested stock options. The company’s physical AI strategy is viewed by some on Wall Street as a multi-year growth driver, leading to upward price forecast revisions.
Analysts show mixed views on Tesla‘s future, with the average 2026 price target for TSLA at $480, representing a 15% increase from current levels. Firms like Wells Fargo express bullish sentiment based on the robotics potential.
Conversely, GLJ Research analyst Gordon Johnson has called Optimus a “delusion,” assigning only a 15% to 20% probability that Tesla will generate meaningful robotics revenue. He stated, “Wall Street bulls are ‘assigning near-certainty to it. That’s not investing. That’s speculation.'”
