After several bruising years of underperformance that tested even her most loyal followers, Cathie Wood delivered a long-awaited comeback in 2025. Her flagship ARK funds posted strong gains, decisively outperforming major U.S. benchmarks. The turnaround came as disruptive technology themes—from artificial intelligence (AI) to robotics—regained momentum, playing directly into ARK’s core investment philosophy.
Still, even amid this resurgence, controversy continues to surround her portfolio, especially when it comes to Tesla (TSLA). While Wood has trimmed her Tesla position multiple times in recent weeks, the stock remains the largest holding across her core ARK funds. The apparent contradiction has sparked renewed questions: Is Wood losing confidence in her most famous bet, or is this simply disciplined portfolio management? Let’s take a closer look!
Tesla is a prominent innovator dedicated to accelerating the global transition to sustainable energy. The Elon Musk-led powerhouse designs, develops, manufactures, leases, and sells high-performance, fully electric vehicles, solar energy generation systems, and energy storage products. It also offers maintenance, installation, operation, charging, insurance, financial, and various other services related to its products. In addition, the company is increasingly focusing on products and services centered around AI, robotics, and automation. TSLA has a market cap of $1.44 trillion.
Shares of the EV maker kicked off the new year on a lackluster note, sliding nearly 4%. TSLA stock came under pressure on Tuesday after Nvidia’s (NVDA) self-driving vehicle announcements. The AI darling unveiled Alpamayo, essentially a “brain” designed to power autonomous vehicles.
Cathie Wood’s ARK funds handily beat the broader market in 2025. The ARK Innovation exchange-traded fund (ARKK) and the ARK Next Generation Internet ETF (ARKW) each climbed roughly 35% for the year, easily outpacing the S&P 500’s ($SPX) gain of more than 16%. The rally was fueled by Wood’s emphasis on disruptive technologies such as AI, genomics, and robotics. Still, in her New Year’s message, Wood called 2025 “one heck of a year.”
Tesla remains Wood’s highest-conviction bet. TSLA stock is the largest holding in both ARKK and ARKW, representing 11.11% and 8.97% of their respective portfolios. Wood often describes Tesla as “the largest AI project on earth,” citing its advancements in autonomous driving and robotaxis. Notably, Wood has set a $2,600 price target for Tesla by 2029, implying substantial upside from current levels.
Meanwhile, Wood has recently been trimming her Tesla position. The latest sale occurred in late December, when Wood reduced her Tesla stake by 60,715 shares, worth roughly $30 million, across the flagship ARKK (ARKK), ARKW, and ARKQ (ARKQ) ETFs. However, the primary reason for the sales appears to be standard portfolio rebalancing and profit-taking. Sometimes institutional managers are forced to sell stocks, even ones they favor, to manage exposure and control risk. Moreover, while the moves may look alarming in absolute—or dollar—terms for Tesla shareholders, they were relatively small compared with the size of Wood’s overall stake.
Last Friday, Tesla reported fourth-quarter vehicle deliveries of 418,227 units. That marked a 16% decline from a year earlier, when the company delivered 495,570 vehicles. The figure also fell short of analysts’ expectations of 422,850 deliveries, based on an average of 20 forecasts published by the company. Still, the decline was expected after the federal government ended the $7,500 EV purchase tax credit in September, effectively increasing the cost of EVs in the U.S.
The bright spot of the report was 49% growth in Tesla’s energy business. The company deployed a record 14.2 GWh of energy storage products. I’ve been a big fan of Tesla’s energy business for a while and was happy to see that number. The segment provides some kind of earnings stability and diversification at a time when the company’s core EV business is struggling, and it works to pivot toward robotics and autonomous vehicles.
Investors are now awaiting Tesla’s fourth-quarter earnings report on Jan. 28 to complete the picture of a year unlike any other. For Q4, Wall Street projects earnings per share of $0.44, down 39.66% year-over-year (YoY). A year earlier, the estimate stood at roughly $0.73. Meanwhile, TSLA’s revenue is projected to drop 4.26% from the previous year to $24.61 billion. However, much like the fourth-quarter delivery update, investors appear prepared for weak quarterly results and are far more focused on AI and robotaxis. William Blair analyst Jed Dorsheimer said in a note that the weak report “will have little influence on the stock, which is valued almost entirely on the transformation to real-world AI.”
In 2026, a lot is riding on Tesla’s progress with its robotaxi program because its stock valuation is heavily tied to the success of its autonomy technology and the launch of a viable self-driving service. Notably, TSLA stock trades at roughly 276 times forward earnings, making it the most expensive name in the S&P 500. Much of that valuation hinges on the company’s progress in AI applications, including robotaxis, which leaves little margin for error.
Robotaxis sit at the intersection of Tesla’s manufacturing, autonomy, and software ambitions. Tesla rolled out its robotaxi business in Austin, Texas, in June with safety monitors in the front passenger seat. CEO Elon Musk has recently hinted that safety monitors may be removed soon. More precisely, Musk posted on Dec. 24 that he was riding in a robotaxi without a safety monitor. Tesla also operates ride services in the Bay Area using vehicles with drivers and has announced plans to expand the service to Arizona, Nevada, and Florida. Meanwhile, Wedbush analyst Dan Ives expects Tesla’s robotaxi operations to be active in 30 cities by the end of 2026.
With that, the focus this year will turn to whether Tesla can expand robotaxi services beyond tightly controlled trials while maintaining regulatory compliance, safety transparency, and operational reliability.
Wall Street analysts remain split on TSLA stock. Of the 40 analysts covering the stock, 14 rate it a “Strong Buy” and one calls it a “Moderate Buy,” while 16 suggest holding and nine assign a “Strong Sell” rating. This results in a consensus “Hold” rating. TSLA shares currently trade above their average price target of $395.32, though they still offer meaningful upside to the Street-high target of $600.
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com