Tesla has increasingly pivoted its focus to A.I. Justin Sullivan/Getty Images In 2024, Tesla (TSLA)’s electric vehicle deliveries fell for the first time in the company’s 21-year history. But according to CEO Elon Musk, that’s no cause for concern because Tesla’s future is all about A.I. and other non-automobile businesses. And investors seem to buy the argument—for now. Sign Up For Our Daily Newsletter Sign Up See all of our newsletters Following a weaker-than-expected fourth-quarter earnings report yesterday (Jan. 29), Tesla shares are still up by nearly 4 percent today. The discrepancy has caused analysts to wonder whether Tesla, which is currently the world’s eighth most valuable public company with a $1.3 trillion market cap, should even be viewed as a car company anymore. “We can almost definitely say the market doesn’t treat [Tesla] like an auto company, but rather an A.I. company,” said Joseph Spak, an analyst with UBS, in an investor report. Tesla’s EV sales, which account for more than three quarters of the company’s revenue, totaled at $20 billion for the October-December quarter, representing an 8 percent decrease year-over-year. Total quarterly revenue came at $26 billion, up from $25 billion a year prior, and net income came at $2.3 billion, a sharp decline from the $8 billion a year prior. Full-year revenue climbed 1 percent year-over-year to $98 billion, while net income fell 53 percent to $7 billion. Despite lackluster financial performance, Musk believes Tesla’s true value lies within its A.I. investments. These areas will “bear immense fruit in the future” on a scale that is “difficult to comprehend,” Musk told analysts yesterday. Tesla could eventually be worth more than the next top five companies combined, according to the billionaire. “That is overwhelmingly due to autonomous vehicles and autonomous humanoid robots,” he added. Musk’s remarks focused “almost entirely around autonomy, A.I. and robotics” and largely neglected the company’s fundamentals, according to an analyst note from Morgan Stanley (MS)’s Adam Jones. Market activity, too, appears separate from the company’s financial performance. Tesla shares “continue to strike us as having completely divorced from the fundamentals,” Jones said. Musk spent much of yesterday’s earnings call detailing his grand vision for Tesla’s future in self-driving vehicles and robotics. In June, some of the company’s cars will begin an unsupervised autonomous driving service in Austin, Texas, he announced, adding that Tesla has received interest from other car companies looking to license its full self-driving technology. The billionaire said Tesla will also make progress on developing its Optimus humanoid robots this year, estimating the company will build “several thousand” to use internally at Tesla by the end of 2025. When these A.I.-centered ambitions will actually pay off remains to be seen. “Investments in autonomous driving and A.I. are the main pivot for those who have a bullish thesis about this company, but for the umpteenth time they have not played a major role in economic terms,” said Seeking Alpha analyst Eugenio Catone, adding that the company’s future growth claims are tenuous. Much of Wall Street, however, still view Tesla’s A.I. play as cause for celebration instead of concern. Tesla’s latest quarterly results are “emblematic of a company in the transition from an automotive ‘pure play’ to a highly diversified play on A.I. and robotics,” according to Jones. RBC Capital’s Tom Narayan, meanwhile, pointed to company interest in Tesla’s autonomous technology as a sign that its “moonshots are getting real.” In a particularly bullish case, Tesla’s future ambitious could be worth at least $1 trillion for the company, according to Wedbush Securities analyst Dan Ives. Opportunities in A.I. and self-driving are “90 percent of the Tesla story today,” Ives said in an analyst note. Tesla’s plans to introduce autonomous vehicles in Austin is a “significant validation” that the company is making progress on unsupervised full self-driving, Ives said, adding that his biggest concerns surrounding such a milestone lie not with Tesla’s technological capabilities but its regulatory hurdles.