Buying the Dip on Tesla Stock? Read This First

By Brett Schafer – Apr 17, 2026 at 4:20PM ESTKey PointsTesla's automotive business has been stalled out for over two years now. Its new projects in semiconductors and humanoid robots are far-fetched.Shares look highly overvalued relative to the company's fundamentals. It is always about the future with Tesla (TSLA +2.96%). For years, it was solar energy and batteries. Then came the Cybertruck and Tesla Semi. Now, all the company can talk about is its foray into humanoid robots, autonomous taxis, and even a new semiconductor endeavor. However, as we sit here in 2026, around 90% of Tesla's business comes from automotive products, just as it did 10 years ago. Before buying the dip on Tesla with shares down 21% from all-time highs, read this first. You don't want to forget valuation when buying a stock. Image source: Getty Images. Tesla's automotive business is stagnating The last 12 months of automotive deliveries for Tesla are down from 2023, making it over two years of stagnation for this financial metric. Combined with lower selling prices, Tesla's automotive revenue is down from $82.4 billion to $69.5 billion in 2025. ExpandNASDAQ: TSLATeslaToday's Change(2.96%) $11.51Current Price$400.41Key Data PointsMarket Cap$1.5TDay's Range$391.65 - $409.2952wk Range$222.79 - $498.83Volume4.7MAvg Vol63MGross Margin18.03% What has held the automotive business back is a lack of innovation since the launch of the Model 3 and Model Y vehicles nearly a decade ago. The Cybertruck was supposed to be a revolutionary vehicle, but it has turned into a bust, with little customer demand and likely being a large money loser for the company. Management has discussed building new vehicles or versions of the Model 3 and Y, but so far, none have materialized aside from the Cybertruck and Semi, which are niche products. There has been strong growth in the energy generation and storage segment due to the growing need for lithium battery storage, but it still generated just $13 billion in revenue last year, with slim margins. Autonomous vehicles have been discussed as a future revenue driver, but they have seen limited release in Austin, Texas, for the time being. Will computer chips and humanoid robots save the day? As Tesla is wont to do, the company is now pivoting to brighter, shinier objects to keep optimism high among its shareholder base. These objects include the humanoid robot project called Optimus, as well as the recently announced TerraFab project for computer chips. TerraFab is an effort by Tesla, SpaceX, xAI (and maybe Intel) to build a massive semiconductor manufacturing facility in the United States, mainly to supply all the companies' artificial intelligence (AI) efforts. Optimus will be part of this, using the computer chips from TerraFab, with plans to have 1 billion Optimus robots do the work. If this all sounds far-fetched, that is because it is. No humanoid robot has been able to accomplish freeform tasks, a problem that has stumped engineers for decades. Building this amount of computer chip capacity may cost hundreds of billions of dollars at a time when there are massive bottlenecks in that supply chain. It is hard to see how TerraFab or Optimus will have a positive impact on Tesla's business over the next five years. Data by YCharts. A stark valuation picture for Tesla Even if Tesla successfully expands into humanoid robots or semiconductors, its stock is already priced as if it will. Right now, Tesla trades at a market cap of $1.14 trillion and a price-to-earnings ratio (P/E) of 339. Net income from the automotive business may grow a bit over the next decade due to the general tailwind of electric vehicles over gasoline-powered cars, but the sector is highly competitive, with Chinese manufacturers expanding worldwide. If the automotive business has minimal prospects, while the future prospects for these grandiose endeavors will not pan out for a long time, if ever, that leaves investors with the nagging question: Why would you want to own Tesla stock over the next five years? The stock has been at a premium valuation for years and is at risk of trading back down to where its automotive peers are, which would mean a 90% haircut or more to the current stock price. This is not a risk investors should be willing to take. Avoid buying Tesla stock for now.Read NextApr 17, 2026 •By Howard SmithStock Market Today, April 17: Tesla Rises Again to Break Losing StreakApr 17, 2026 •By Matt Frankel, CFPS&P 500 Explained: How the Index Works and How to Invest in ItApr 17, 2026 •By Sean WilliamsThis Is the SpaceX Number No One Is Talking About -- and History Says It May Total $175 BillionApr 17, 2026 •By Lee SamahaTesla in 3 Years: Boom, Bust, or Quietly Crushing It?Apr 17, 2026 •By Anthony Di PizioShould You Buy Tesla Stock Before April 22?

The Answer Might Surprise You.Apr 17, 2026 •By Rachel WarrenBest Blue Chip ETFs to Buy in 2026About the AuthorBrett Schafer is a contributing Motley Fool stock market analyst covering consumer goods, financials, technology, and industrials. Brett is a self-taught investor and has hosted the Chit Chat Stocks podcast since 2018. He previously worked as a lab engineer for science laboratories. He holds a bachelor’s degree in mechanical engineering with minors in finance and mathematics from Washington State University. His lab work on Major League Baseball’s juiced ball problem was featured in The Wall Street Journal and other national outlets.TMFBrettSchaferX@CCM_BrettStocks MentionedTeslaNASDAQ: TSLA$400.41(+2.96%)+$11.51*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.