Wall Street analysts give Tesla little long-term credit for its core car operations despite a $1.59 trillion market value and plans to spend more than $25 billion this year. This car-business skepticism underpins a valuation gap, driving investors to look elsewhere for upside.

To justify its premium, Tesla’s valuation now relies heavily on future AI ventures, full self-driving Robotaxis and the Optimus humanoid robot project, with more than half of sum-of-the-parts targets tied to these initiatives. Firms like Piper Sandler label vehicle sales a “minor long-term revenue source,” while UBS cautions that the $25 billion spend is only the beginning for physical AI build-out.

Investors are extending Musk’s track record to SpaceX, which is targeting a valuation above $2 trillion in its upcoming IPO. NYU professor Aswath Damodaran sees optionality richer at SpaceX but prefers a $1 trillion valuation, while Ark Investment and Baillie Gifford argue that a higher multiple reflects Musk’s history of compressing timelines and delivering on ambitious goals.