ETFs in Spotlight as Tesla Tops Q4 Earnings, Dips on Revenue Miss

Shares of Tesla TSLA rose 2% in extended trading on Jan. 28, 2026 (as reported by CNBC), but ended the following day’s trading with a  3.4% slip after posting mixed fourth-quarter 2025 results. Lower year-over-year revenues, which also missed analysts’ expectations, on account of a double-digit decline in vehicle deliveries along with a 61% slump in net income, are likely to have driven the slump in TSLA’s share price. 

Looking ahead, Tesla expects to incur capital expenditures of more than $20 billion, with the lion’s share allocated to AI-related initiatives, as well as development and factory expansion for new products, including Cybercab, Semi, Optimus and Megapack.

While this robust pipeline and the recent price pullback may tempt dip-buyers, many remain wary of the long-term viability of Tesla’s new profit centers. The pivot to an AI-first model comes at a time when the American automaker is already battling intense international competition and a shrinking share of the traditional EV market. Critics argue that betting the farm on robotaxis — a segment fraught with regulatory hurdles and technical ‘edge cases’ — is a high-stakes attempt to recoup margins lost to the EV price wars.

Given the organic headwinds of an aging fleet and the industry-specific challenges of autonomous scaling, Tesla's "physical AI" vision may face a much longer and more expensive road to fruition than current valuations suggest.

Against this backdrop, a risk-averse investor may prefer to avoid direct single-stock exposure and instead monitor exchange-traded funds (ETFs) with significant Tesla weightings. By holding a diversified basket of industry leaders alongside Tesla, these funds mitigate the idiosyncratic risks associated with a single company's pivot, effectively spreading exposure across diverse sectors. 

But before mentioning these ETFs, let us check how Tesla performed in the fourth quarter in terms of other metrics.

A Brief Analysis of TSLA’s Q4 Results

Tesla reported fourth-quarter 2025 earnings per share of 50 cents, which beat the Zacks Consensus Estimate by 8.7% but declined 31.5% from the year-ago figure. Total revenues of $24.90 billion missed the Zacks Consensus Estimate by a whisker and dropped 3% year over year. 

Tesla achieved its highest quarterly energy storage deployments, driven by record Megapack deployments, in the fourth quarter. However, its automotive revenues suffered an 11% decline.

The company ended 2025 with operating cash flow worth $14.7 billion and free cash flow of $6.2 billion. Its cash and investments increased $7.5 billion to $44.1 billion at the end of 2025.

Looking ahead into 2026, the company plans to further invest in the infrastructure needed to support clean energy, transportation, and autonomous robots, including the ramp-up of six new production lines across vehicle, robotics, energy storage, and battery manufacturing, while further leveraging its existing factory, charging, and service-center footprint to support future growth.

In terms of product development, the company aims to continue production ramp-ups for Tesla Semi and Cybercab in North America. It also plans to begin Megapack 3 and Megablock production at Megafactory Houston this year. 

In the first quarter of 2026, Tesla plans to launch the Gen 3 version of Optimus, featuring major upgrades over version 2.5, the company’s first design intended for mass production. Preparations for the first production line are underway, including supply-chain readiness, with production expected to begin before the end of 2026 and an eventual planned capacity of 1 million robots per year.

Tesla-Heavy ETFs to Tap

Consumer Discretionary Select Sector SPDR Fund XLY

This fund, with assets under management (AUM) worth $23.87 billion, offers exposure to 48 companies from specialty retail; broadline retail; hotels, restaurants and leisure; textiles, apparel and luxury goods; household durables; automobiles; automobile components; distributors; leisure products; and diversified consumer services industries. Tesla holds the second position in this ETF, with 18.92% of the fund. Amazon AMZN and Home Depot HD hold the first and third spots in this fund, with 23.665% and 5.98% weightage, respectively.

XLY has gained 5.8% over the past year. It charges 8 basis points (bps) as fees. The fund traded at a good volume of 11.71 million shares in the last trading session.  

Vanguard Consumer Discretionary ETF VCR

This fund, with net assets worth $6.3 billion, offers exposure to 288 U.S. companies from the consumer discretionary sector. Tesla holds the second position in this ETF, with 18.06% of the fund. AMZN and HD hold the first and third spots in this fund, with 21.11% and 4.67% weightage, respectively.

VCR has gained 3.9% over the past year. It charges 9 bps as fees. The fund traded at a volume of 0.03 million shares in the last trading session.  

Direxion Daily Magnificent 7 Bull 2X Shares QQQU

This fund, with a net asset value of $56.38 per share as of Jan. 30, 2026, offers exposure to the seven largest NASDAQ-listed companies. Tesla holds the third position in this ETF, with 14.45% of the fund. Alphabet GOOGL and Apple AAPL hold the first and second spots in this fund, with 17.29% and 14.81% weightage, respectively.

QQQU has gained 21.6% over the past year. It charges 98 bps as fees. The fund traded at a volume of 0.07 million shares in the last trading session.  

Global X PureCap MSCI Consumer Discretionary ETF GXPD

This fund, with net assets worth $24.75 million, provides exposure to 50 companies from the Consumer Discretionary sector. Tesla holds the second position in this ETF, with 19.32% of the fund.  AMZN and HD hold the first and third spots in this fund, with 36.48% and 5.93% weightage, respectively.

GXPD has gained 1.8% over the past year. It charges 15 bps as fees. The fund traded at a volume of 0.003 million shares in the last trading session.  

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This article originally published on Zacks Investment Research (zacks.com).

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