Prediction: Tesla's Optimus Robot Will Transform the Stock by the End of 2026
Key Points
Tesla's electric vehicle sales are down, revenue is dropping, and margins are shrinking.
Investors are looking forward to CEO Elon Musk's vision of robotics and artificial intelligence.
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This could be a big year for Tesla (NASDAQ: TSLA). The electric vehicle maker and member of the "Magnificent Seven" grouping of stocks is seeing EV deliveries fall and margins tighten, but the stock is still up 20% in the last year because CEO Elon Musk has something new up his sleeve.
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If Musk has his way -- and I think it's very possible -- Tesla will make a massive transition this year from being an EV company to something entirely different. Its Optimus robots appear to be just around the corner, and I predict they will completely transform Tesla's identity by the end of the year.
Image source: Tesla.
Optimus robots are coming
Tesla has been working to develop Musk's vision for the Optimus -- a humanoid robot under development that Musk predicts will one day "eliminate poverty." The CEO envisions that the robots will be used in both factories and residences, with people utilizing the Optimus to do everything from household chores to caring for the elderly and children.
Tesla is so invested in making the Optimus a reality that the company is planning to shutter its Model S and Model X electric vehicle lines this year and use the factory space in Tesla's Fremont, California, facility for Optimus production.
That's probably a better use of factory space, anyway. More than 97% of Tesla's 406,227 vehicle deliveries in the fourth quarter were Tesla's Model 3 and Model Y. The company's other lines, which include the S, X, and Cybertruck, accounted for less than 12,000 units.
What will happen to Tesla stock in 2026?
Tesla is an interesting company right now because it's going through a massive transformation. Auto revenue fell 9.1% in 2025, and net income was down a whopping 46% as Tesla cut prices and offered incentives in an increasingly competitive EV market.
The company is pouring resources into Optimus and Tesla's full self-driving software, which Musk also plans to release widely this year. The FSD package, if finalized and approved by regulators, would allow Tesla to offer Cybercabs and permit Tesla owners to monetize their vehicles as robotaxis.
Dan Ives of Wedbush Securities says that Tesla's focus on real-world development of AI makes it the best physical AI company in the world, and will change how investors value the company.
Ives says that Tesla could reach a $2 trillion market cap by the end of the year, growing to a $3 trillion market cap by the end of 2027, based on the growth of FSD and robotics. That would be a 25% increase in stock price this year, and an 87% increase by the end of 2027.
That's amazing growth considering that Tesla's unsupervised autonomous driving is limited right now to the Austin, Texas, area, and Musk doesn't expect the Optimus robots to be for sale to the general public until the second half of 2027.
But Musk has always been able to drive enthusiasm for his products, even before they begin generating revenue. Right now, Tesla stock is climbing because of what investors think the company will be, and not what it is today. By the end of the year, the development of the Optimus robot will be in full swing, and Tesla's identity as an automaker will change forever.
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Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
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