<p>Last year, technology stocks once again proved to be a worthy investment decision thanks to a bullish narrative surrounding the prospects of artificial intelligence (AI). When it comes to AI, one of the most scrutinized companies is <strong>Tesla</strong> <span class="ticker-mention inline-flex items-center font-bold">(TSLA <span class="ml-1 text-red-900">0.27%</span>)</span> -- and for good reason.</p>
<p>Tesla CEO Elon Musk might be one of the greatest marketers of all time. The serial entrepreneur has a knack for captivating investor enthusiasm -- often promising grand innovations that will change the world. But as the old saying goes, actions speak louder than words. Last year, Tesla stock gained a rather mundane 11.4% -- underperforming both the <strong>S&amp;P 500</strong> (up 16.4%) and <strong>Nasdaq Composite</strong> (up 20.4%). <br/></p>
<p>There are several reasons why the once-unstoppable growth stock has entered a lower gear. Spoiler alert: There's a major disconnect between what Musk has promised and what Tesla has actually delivered.</p>
<p>Let's dig into the finer details over at Tesla right now. While sentiment remains high, smart investors know that the company's upcoming earnings report on Jan. 28 could very well set the stage for the rest of 2026.</p><div><div id="foolcom_sidebar_top_container"></div></div>
<div><img alt="Tesla building with cars parked out front." width="880" height="528" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84NTA4MjcvdGVzbGEtYnVpbGRpbmctd2l0aC10ZXNsYS1sb2dvLWFuZC10d28tdGVzbGFzLWluLWZyb250LTMucG5nJnc9Mzg0MA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84NTA4MjcvdGVzbGEtYnVpbGRpbmctd2l0aC10ZXNsYS1sb2dvLWFuZC10d28tdGVzbGFzLWluLWZyb250LTMucG5nJnc9Mzg0MA"/>
<p>Image source: Tesla.</p>
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<h2>Tesla gave investors a preview of fourth-quarter earnings -- and it wasn't good</h2>
<p>On Dec. 29, Tesla did something rather unusual: It published a press release that compiled a series of vehicle delivery estimates from the sell-side analysts who cover Tesla stock.</p><div><div><div>Advertisement</div><div><div></div></div></div></div>
<p>According to Wall Street, analysts expected total deliveries of 422,850 and 1,640,752, respectively, for the fourth quarter and full year of 2025.</p><div><div id="in_line_article_pitch_container"></div></div>
<p>Just four days later, Tesla released its actual delivery figures. For the fourth quarter and full year, the company delivered 418,227 and 1,636,129 vehicles -- both falling short of consensus estimates.</p>
<p>Considering sales of its electric vehicles (EVs) are Tesla's largest source of revenue and profit, consistently declining deliveries don't bode well for the company's financial profile. When you layer on top that one of the key reasons behind these lagging deliveries is Tesla's shrinking market share, investors are surely becoming worried about the company's outlook.</p>
<h2>Tesla's interesting start to 2026</h2>
<p>As of market close on Jan. 12, Tesla stock is breakeven in 2026. That said, shares have experienced a couple of fleeting rallies -- something I expect to continue leading up to the earnings report at the end of the month.</p>
<section><div><div><div><small><div>Expand</div></small></div><div><img alt="Tesla Stock Quote" width="64" height="64" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL1RTTEEucG5nJnc9MTI4?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL1RTTEEucG5nJnc9MTI4"/></div><div><h2>NASDAQ: TSLA</h2><div>Tesla</div></div></div><div><div><div>Today's Change</div><div>(-0.27%) $-1.18</div><div>Current Price</div><div>$438.02</div></div><div></div></div></div><div><div></div><div><h3>Key Data Points</h3><div><div>Market Cap</div><div>$1.5T</div><div>Day's Range</div><div>$437.65 - $445.36</div><div>52wk Range</div><div>$214.25 - $498.83</div><div>Volume</div><div>11K</div><div>Avg Vol</div><div>78M</div><div>Gross Margin</div><div>17.01%</div></div></div></div></section>
<p>Perhaps the main variable fueling Tesla's volatility at the moment is AI. For years, Musk has expressed a vision to transform Tesla from an automobile manufacturer into a tech-enabled services business. Specifically, Musk has touted Tesla's progress in autonomous driving as the company seeks to disrupt the ride-hailing market and build its own robotaxi fleet.</p>
<p>Musk himself said that Tesla's robotaxi service would be serving half of the U.S. population by the end of 2025 -- a vision that did not come to fruition and just one of many previously made overzealous promises by Musk.</p>
<p>While some bulls on Wall Street think robotaxis is a trillion-dollar opportunity for Tesla, the company has very little to show for its investments in this technology so far. In my eyes, encouraging rhetoric around robotaxi is carrying less weight by the day -- hence, Tesla's rallies throughout 2026 have been short-lived and answered with sharp reversals.</p>
<h2>Should you buy Tesla stock before earnings?</h2>
<p>Analyzing Tesla through the lens of traditional value metrics -- price-to-sales (P/S), price-to-earnings (P/E), and forward price-to-earnings -- isn't entirely useful.</p>
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<p>Data by YCharts.</p>
<p>This profile stresses the fact that Tesla is valued like a hypergrowth, high-margin technology business, even though it is a capital-intensive car manufacturer with shrinking sales and profit margins.</p>
<p>My suspicion is that Musk will use the majority of the upcoming earnings call to deflect the realities of Tesla's actual situation relative to the competitive landscape and (once again) put on a cheerleading show for robotaxi and other AI-related ambitions.</p>
<p>In my view, investors should not be distracted by such talking points. For now, Tesla remains an extremely volatile momentum stock. Investing at current price points essentially validates the AI thesis, despite the company achieving little traction in this field.</p>
<p>Any rallies the stock experiences will likely be short-lived and fueled by traders as opposed to measurable, groundbreaking progress the company makes over the next couple of weeks. Against this backdrop, I would not buy Tesla stock before fourth-quarter earnings are released.</p><div id="article_pitch_container"></div><div id="promobox_container"></div>

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<p>Tesla's stock performance has been underwhelming, gaining only 11.4% last year, lagging behind the S&P 500 and Nasdaq. The company fell short of delivery estimates for Q4 and the full year, raising concerns about its financial outlook. Despite high sentiment, analysts warn that Tesla's promises, particularly regarding AI and robotaxis, have not materialized. With earnings due on Jan. 28, the stock remains volatile, and the recommendation is to avoid buying before the report, as any rallies may be short-lived and driven by traders rather than substantial progress.</p>

- Tesla's stock underperformed in 2025, rising only 11.4%, significantly lagging behind the S&P 500 and Nasdaq Composite amid high expectations for AI advancements.  
- The company's fourth-quarter vehicle deliveries fell short of analyst estimates, raising concerns about its shrinking market share and overall financial outlook.  
- Given the current volatility and lack of substantial progress in its AI initiatives, investing in Tesla before the upcoming earnings report is viewed as risky and potentially unwise.

Is Tesla Stock a Buy Before Jan. 28?