Tesla (NASDAQ:TSLA) may have cleared a major hurdle after shareholders approved Elon Musk’s $1 trillion compensation package, but analysts caution that the company’s outlook remains uncertain, with much of its future value still tied to unproven artificial intelligence projects.

According to Truist Securities analyst William Stein, retaining Musk was “imperative for the company’s success,” emphasizing that the pay package is closely aligned with shareholder interests since it “pays out only if Tesla achieves steep market capitalization and operational milestones.”

Stein noted that the new compensation plan is designed primarily to secure Musk’s leadership and voting power, rather than its monetary value, as Tesla’s “physical AI” initiatives—including self-driving, robotics, and automation—become increasingly central to its long-term strategy.

He estimated that only 11% of Tesla’s valuation is currently based on its automotive business, another 11% on energy operations, while nearly two-thirds of its worth is linked to AI-driven ventures such as Full Self-Driving (FSD), robotaxis, and the Optimus humanoid robot.

“We continue to see TSLA as much more of a physical AI company than a car company,” Stein said.

However, he also warned that “all of these projects are quite unproven (close to zero revenue),” adding that Truist’s review of FSD found the system “impressive, but not yet working as expected.”

The robotaxi initiative, Stein said, “is just getting going” and will likely remain limited until FSD achieves near-perfect reliability. Meanwhile, the Optimus robot is “still at a prototype stage,” with Stein recalling that “the last view we had of this project … was of a Mechanical Turk.”

He added, “So, while it’s a zero today, if we expect this will eventually be a general purpose robot combining human-like dexterity with super-human intelligence, it’s quite easy to adopt a view that Optimus could sell millions per year for $30k each.”

Despite Tesla’s ambitious AI roadmap, Stein noted that the company’s valuation—currently over 200 times 2026 consensus earnings—already prices in much of that future success.

“Because the physical AI projects are so uncertain, it’s difficult to recommend the stock,” Stein wrote.

Although Musk’s leadership has stabilized the company’s direction, Stein concluded that the payoff from physical AI “is still a long way off.”

Truist reaffirmed its Hold rating on Tesla with a $406 price target.

Tesla stock price

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