This Artificial Intelligence Stock Could Be the Biggest Surprise of 2026

We've seen some amazing returns from artificial intelligence stocks this year -- popular names such as Alphabet, Broadcom, Palantir Technologies, and Advanced Micro Devices are all up more than 50% on the year.

However, there's one name that's just been treading water in 2025, but could be in line for a massive upswing in 2026. And that's the leading electric vehicle company that has its sights set on revolutionizing travel and bringing autonomous driving mainstream within the next 12 months.

Let's take a closer look at Tesla (NASDAQ: TSLA) stock.

Image source: Tesla.

Tesla by the numbers

On the surface, you wouldn't think that Tesla is headed for greatness. As the world's largest maker of electric vehicles, it's coming off a third quarter in which it reported strong revenue, thanks to the $7,500 expiring tax credit for EVs. In short, customers rushed to get their orders in before the credit expired at the end of September.

Tesla's revenue was $28.09 billion, up from $25.18 billion a year ago, and it set company records for deliveries with 497,099 vehicles -- 481,166 of them being their popular Model 3 and Model Y.

However, the company's net income fell from $2.71 billion in the third quarter of 2024 to $1.62 billion in the current quarter. And most telling was the massive drop in operating margin, from 10.8% a year ago to just 5.8%.

Things for the fourth quarter don't look well, either. According to the European Automobile Manufacturers Association, Tesla's October sales in Europe declined by 48.5% compared to the same period last year. And Tesla sales fell 35.8% in China last month, marking a three-year low. The company's U.S. sales dropped 24% in October, according to research firm Motor Intelligence.

Some loss is to be expected, although these numbers are hard to stomach. Tesla has become less popular in Europe thanks to some blowback from CEO Elon Musk's endorsement of Germany's far-right AfD party last spring, and China sales had already been slipping as Chinese EVs take more market share. In the U.S., Tesla is surely seeing a drop because buyers accelerated their purchases to take advantage of the now-expired tax credit.

But nobody thinks that Q4 deliveries will be a pleasant surprise. So, what's the potential catalyst for Tesla stock in 2026?

It's all about autonomous driving

One thing that Tesla pointed out in its Q3 earnings report is that it successfully rolled out version 14 of its full self-driving software, as well as making its Robotaxi app available throughout the U.S. and Canada on iOS. Both are essential for achieving Musk's dream of allowing Tesla owners to monetize their vehicles by making them available as robotaxis when they aren't in use.

However, analyst Rob Wertheimer of Melius Research points to Tesla's rapid deployment of FSD software improvements, and says the industry is approaching a tipping point that could shift billions of dollars toward Tesla and away from other automotive companies.

His argument is that Tesla's FSD will go mainstream next year and that it will be a shocking moment for many because fewer than 1% of the population has used an autonomous vehicle. When they see Tesla's vehicles in action, used by thousands of Tesla owners, "it will still shock most people," Wertheimer says.

Does that sound familiar? I think it does. I think it sounds a lot like November 2022, when OpenAI unveiled ChatGPT. It was the first time that most people used generative AI, and the resulting frenzy is still being felt among technology companies and Wall Street. Tesla says 12% of its customers have paid for the full self-driving software, and so far more than 6 billion miles have been driven using the FSD platform.

The company is currently working on developing reasoning capabilities for the FSD platform, Musk says, which will enable it to perform tasks such as dropping users off at a location and then finding a parking spot on its own. The software is currently in version 14.1.7, with Musk saying that Tesla plans to roll out reasoning in versions 14.3 or 14.4.

Is Tesla stock worth buying today?

I think there's massive potential for Tesla because, despite what will likely be lower sales and delivery numbers this quarter, the company is an unquestioned leader in autonomous driving, with a huge fleet at the ready when the software is prepared.

I wouldn't put a huge stake of my portfolio into Tesla stock. However, for investors with a higher-than-average appetite for risk, the rewards of FSD and Tesla's technology are truly tempting.

Patrick Sanders has positions in Palantir Technologies. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Palantir Technologies, and Tesla. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.