When fundamentals give way to AI narratives, is Tesla just holding on? Investors are at a crossroads.

Tesla's fundamentals are under pressure, with Q1 revenue down 9.23% YoY, net profit down 71.44% YoY, Q2 revenue down 11.78% YoY, and net profit down 16.29% YoY. Both quarters showed negative growth in revenue and profits. Vehicle deliveries in Q1 were down 12.96% YoY, and Q2 was down 13.78% YoY, also in a state of negative growth. This is due to tariffs and Tesla's declining market share in the new energy vehicle sector. Q3 should be better, with nearly 500,000 deliveries driving strong performance. However, this is backed by a sharp increase in electric vehicle tax credit policies. Even if Tesla's performance in the Chinese market recovers in Q4, it may not match Q3, leading to an "overdraft" phenomenon and weak fundamentals. It's like reaching the peak and then falling all the way down... The law of diminishing marginal returns is becoming increasingly evident.

So now, Tesla is basically hanging on by a thread with its AI narrative. The market and investors are more focused on Robotaxi and Optimus, believing they have potential. This sector is still in the development and maturation phase. Tesla leads in data and integration, but delivery timelines are often delayed. Other players like Waymo are more mature in specific areas. These are also highly demanding in terms of design iteration and safety validation. At least Tesla's marketing is promising and attractive to investors, and the market is willing to buy in.

If the AI narrative materializes, Musk's myth will gain another chapter, and Tesla's fundamentals could reignite.

The risk lies in: What if the AI narrative doesn't materialize? Can Musk's vision be realized? Can the myth continue? If the hype doesn't match reality, what will Tesla do?

Let's take another look at the stock price.

$Tesla(TSLA.US) In the third quarter of this year, Tesla's stock price surged over 40% in a single quarter, approaching last December's high at one point.

Yesterday, the market was bullish, with expectations for the earnings report optimistic, closing up 1.85% on lower volume. The trend over the past four weeks has been volatile but stabilized around 410. There may be early profit-taking, with small-position exits at 447-450. Call options could also be considered.

Decode Brother remains optimistic about Tesla's AI narrative. Focus on Tesla's earnings call for explanations on future business directions and AI.

Adding positions could wait until after earnings-driven profits are realized. Long-term investors could wait for Q4 earnings before adding. Consider put options as well.

Overall, Tesla can still hold on. Its core business can continue to generate cash flow, and the high stock price facilitates financing for autonomous driving and robotics R&D. While the market is betting on the AI narrative, and Tesla is aggressively developing these areas, it doesn't mean abandoning EVs, energy storage, or charging. Despite fundamental pressures, past actions show Tesla's intent to expand these markets. The pie is shrinking, but it's still edible. If autonomous driving and Optimus materialize, short-term survival pressure is low. If they don't materialize in the long run, it's just hanging on. At that point, if there's no other action, it's time to exit.