Wood said in a Sunday post on X that it was “sad if not damning” that proxy advisory firms, which make recommendations for how shareholders should vote during companies’ annual meetings, have so much influence. Wood’s comments come after two of the most important proxy firms, Institutional Shareholder Services (ISS) and Glass-Lewis, urged shareholders to reject during Tesla’s annual meeting on Nov. 6 the giant pay package that would give the world’s richest man 29% of the company, up from about 13% now.

Wood particularly criticized the relationship between these proxy firms and index funds, which have an outsized influence over voting because of the large number of shares they control for their investors. Each shareholder gets a certain number of votes based on how many shares they own. Yet, large institutional investors, including index funds, control massive amounts of shares held by their investors, which gives them sway over voting.

“Index funds do no fundamental research, yet dominate institutional voting. Index-based investing is a form of socialism. Our investment system is broken,” she added.

While Wood claims index funds don’t do research, their parent companies absolutely do. The three largest index funds in the world are managed by Vanguard, State Street, and BlackRock, and all three do extensive research for proxy voting decisions and have their own proxy voting guidelines that they publish. Also, those three funds hold over $2 trillion tracking the S&P 500 index and represent the vast majority of retail traders invested in the stock market. While index funds don’t do research to pick stocks, they utilize their research base for voting decisions.

Both proxy firms recommended shareholders vote against Musk’s pay package partly because it dilutes existing investors’ shares and gives Tesla’s highly compensated board too much flexibility when it comes to the goals Musk has to meet to get the full payout, which is about equal to the company’s total market cap.

In another series of posts, Wood added that ISS and Glass Lewis don’t see the potential in Tesla that ARK Invest does and seemingly suggested index funds should be stripped of their voting power. ARK Invest’s flagship ARK Innovation ETF’s largest holding is Tesla, which makes up about 12% of its $8 billion portfolio.

“I believe that history will decide that Glass Lewis and ISS have been menaces to innovation, enabling passive investors who care about ‘tracking errors’ to their indexes but do not care about much else,” Wood wrote in a post referring to how closely index funds track indexes such as the S&P 500.

Russell Rhoads, a clinical associate professor of financial management at Indiana University, said while investors in an active fund know its management may push for changes to a company if it is struggling, the same isn’t true for passive investors who put their money into index funds.

“In general, if I put money into a fund, that’s supposed to mirror the index, that is a passive investment,” he said. “I’m just investing in the market and not trying to influence anything what any other companies are doing business wise.”

Tesla, for its part, said in a Monday statement that the proxy firms aren’t considering the previous 2018 pay package approved by shareholders on two different occasions that allocated $56 billion to Musk over 10 years. Both ISS and Glass Lewis also recommended voters reject the 2018 pay package.

“Glass Lewis’s one-size-fits-all checklists undermine shareholders’ interests, including by opposing proposals designed to build long-term value at Tesla,” the statement read.

When reached for comment, representatives from Glass Lewis and ISS directed Fortune to their respective proxy papers on Tesla.

Prior to the proxy firms’ reports, the SOC Investment Group, which works with pension funds sponsored by major unions such as the International Brotherhood of Teamsters, as well as several parties with an interest in Tesla including state financial officers, signed a letter with the Securities and Exchange Commission urging shareholders to vote no on Musk’s pay package earlier this month. 

If Musk’s pay is approved and the three board members are reelected, “this year may be one of the last times that public shareholders have a meaningful voice in the Company and its leadership given the level of dilution that is likely to take place,” the letter argued.

Tejal Patel, the executive director of Tesla shareholder group SOC Investment Group, said despite the company claiming Musk needs more incentive to stay engaged with Tesla, Musk’s incentives should already align with the company whose shares represent the bulk of his $455 billion net worth. SOC has been vocally critical of Tesla and its corporate governance for multiple Musk pay packages on multiple grounds.

“We just don’t believe that these pay packages are going to really incentivize Mr. Musk to stay at Tesla, nor to be focused on Tesla over his other business endeavors,” Patel told Fortune.

Still, Wood said she was confident Musk’s pay package would pass, in part because of the support of retail investors, which hold about 40% of Tesla’s voting shares. 

“Although the proxy firm ISS has recommended against the package, retail investors are likely to dominate the vote once again. America!”

[This report has been updated to include a paragraph providing additional context on the extent of the major index funds’ research activities.]

For the better part of the last three years, nothing has captivated the attention and capital of investors quite like artificial intelligence (AI). The seemingly limitless possibilities of empowering software and systems with AI can be a game-changer for most industries around the globe. It’s why PwC pegged this global addressable opportunity at a jaw-dropping $15.7 trillion by 2030 in Sizing the Prize.

While there’s no denying that investor hype surrounding the potential for AI has sent dozens of stocks soaring, not everyone on Wall Street shares in this optimism.

In particular, the bar has been set especially low for two of Wall Street’s trillion-dollar AI stocks. Keep in mind, only 10 publicly traded companies on U.S. exchanges have reached the trillion-dollar valuation mark, and not all of these companies are focused on artificial intelligence.

Based on the price target prognostications of select Wall Street analysts, the following two trillion-dollar AI stocks can plunge by up to 95% over the next year.

Image source: Getty Images.

Nvidia: Implied downside of 44%

The first trillion-dollar AI stock you might be shocked to see among possible plunge candidates is the world’s largest publicly traded company, Nvidia (NVDA -2.62%).

Bullishness on Wall Street for Nvidia is nearly universal. Out of the 65 analysts who’ve weighed in on the company, a combined 59 have it rated the equivalent of a buy or strong buy, as of September 2025, with another five chiming in with the equivalent of a hold rating.

The reason for this optimism has to do with Nvidia dominating the AI-graphics processing unit (GPU) space. It began with the Hopper (H100) and has continued with the next-gen Blackwell and now Blackwell Ultra GPUs. No external chip companies are remotely close to matching the compute capabilities of Nvidia’s AI hardware, which has led to a sizable backlog and enviable AI-GPU pricing power.

Nevertheless, Seaport Global analyst Jay Goldberg stands out as Wall Street’s lone wolf when it comes to Nvidia. He has a sell rating on the company with a price target of just $100, which would imply downside of up to 44%, if accurate.

Goldberg had a laundry list of warnings in his latest research note that maintained his and his firm’s $100 price target, including:

• Concerns about a sequential quarterly slowdown in data center sales growth.
• Unjustified optimism surrounding agentic AI, which has a rather small commercial market at the moment.
• Nvidia’s China exposure, with delays in shipments of AI chips to the world’s No. 2 economy giving external competitors in China the opportunity to gain ground.

But in my opinion, Goldberg might be missing the two biggest threats to Nvidia stock.

First, we haven’t seen a next-big-thing investment trend avoid an eventual early stage bubble-bursting event in more than 30 years. Investors consistently overestimate the early stage adoption and/or utility of game-changing technologies, which leads to lofty expectations not being met. Given that most businesses have yet to optimize their AI solutions or generate a positive return on their invested capital, there’s a very high probability, based on historical precedent, of an AI bubble forming and bursting.

The second concern for Nvidia is that many of its top customers by net sales are internally developing AI-GPUs for their data centers. Even though these chips won’t be sold externally, and they’re not a match for Nvidia’s hardware on a compute basis, they are notably cheaper and not backlogged. There’s a good chance Nvidia may lose out on valuable data center real estate going forward, or at the very least contend with delayed upgrade cycles from its top customers.

Image source: Tesla.

Tesla: Implied downside of 95%

But when it comes to implied downside, electric-vehicle (EV) maker Tesla (TSLA 0.98%), which integrates AI solutions into its EVs, takes the cake.

Unlike Nvidia, Tesla has its fair share of skeptics. More than 10% of the 45 analysts covering the company in September rate it as the equivalent of an underperform or sell. This includes GLJ Research founder and analyst Gordon Johnson.

Earlier this year, Johnson reduced his price target on Tesla to just $19.05 per share. Keeping in mind that Tesla stock closed out the previous week at nearly $396 per share, it implies downside of roughly 95%.

Although Tesla has been profitable in each of the last five years, Johnson, a longtime Tesla bear, has a number of critiques to offer.

To begin with, he’s been critical of Tesla’s ancillary projects beyond EVs and energy generation and storage products. For instance, the hype surrounding Optimus robots has added to Tesla’s valuation but provides minimal value to the Tesla brand and little hope of any near-term sales.

Gordon Johnson also pointed to Tesla’s operating structure as a reason to be skeptical of its stock. While most “Magnificent Seven” members are thriving off of high-margin software sales, the bulk of Tesla’s sales are coming from lower-margin hardware where it possesses less pricing power. The more than half-dozen price cuts Tesla has undertaken on its fleet of EVs over the last couple of years is evidence that its competitive edge in the EV space has shrunk.

Johnson has been critical of Tesla’s mind-numbing valuation, as well. Whereas most automakers are valued at high-single-digit or low-double-digit price-to-earnings (P/E) multiples, Tesla shares are valued at an estimated 234 times forecast earnings per share in 2025. Worse yet, more than half of Tesla’s pre-tax income has originated from non-innovative and/or unsustainable sources, such as automotive regulatory credits and interest income on its cash.

Though a decline to $19.05 per share seems highly unlikely, there are other reasons to believe Tesla stock can head notably lower. Specifically, CEO Elon Musk hasn’t given investors much reason to be optimistic of late. Cybertruck sales have been a disappointment and the robotaxi launch event in Austin, Texas, was underwhelming.

These disappointments speak to a broader issue with governance at Tesla. Namely, Musk has a habit of overpromising and underdelivering. Whether it’s promising Level 5 autonomy is “one year” away for 11 straight years or projecting 1 million robotaxis would be on public roads by 2020, Musk consistently misses the mark.

The issue from an investment standpoint is that these lofty promises are being baked into Tesla’s stock. If these unfulfilled promises are backed out, it becomes very possible for Tesla shares to lose a significant percentage of their value.

Tesla (TSLA 7.21%) is one of the world’s largest manufacturers of electric vehicles (EVs), but rising competition is slowly chipping away at its market share. EV sales are still the main driver of Tesla’s financial results, but CEO Elon Musk is trying to future-proof the company by steering its resources into new products like autonomous vehicles and robotics.

Ark Investment Management, which was founded by seasoned tech investor Cathie Wood, predicts autonomous vehicles will transform Tesla’s economics. In fact, Ark thinks a whopping 86% of the company’s earnings will come from self-driving robotaxis by 2029, paving the way for a stock price of $2,600. That would be a 615% increase from where Tesla stock trades today.

How realistic is Ark’s forecast? Let’s dive in.

Image source: Tesla.

Tesla’s EV business is sputtering

To meet Ark’s bullish 2029 forecast, Tesla will have to transition from selling passenger EVs to selling self-driving robotaxis, and it will also have to build new services like an autonomous ride-hailing network.

Unfortunately, Tesla is currently operating from a position of weakness, which is forcing this shift earlier than the company perhaps would have liked. After all, government regulators haven’t approved Tesla’s full self-driving (FSD) software for unsupervised use anywhere in the U.S. yet, which is a huge barrier to the success of its upcoming Cybercab robotaxi.

Tesla delivered 1.79 million passenger EVs during 2024, which was down 1% from the prior year, marking the first annual decline since the company launched its flagship Model S in 2011. The situation is much worse in 2025, with deliveries shrinking by a whopping 13% in the first half of the year. This led to a 14% decline in Tesla’s revenue and a 31% collapse in its earnings per share (EPS) during the same period, which is alarming to say the least.

A rapid increase in competition is a key reason for Tesla’s woes. Low-cost EV producers like China-based BYD are making serious inroads into some of Tesla’s biggest markets. Tesla’s sales sank by 40% across Europe in July, despite EV registrations climbing by 33% overall. BYD, on the other hand, saw a whopping 225% increase in sales in the region.

Simply put, Tesla is quickly losing market share in the passenger EV space. The company is launching a low-cost EV of its own in order to compete, but production just started so it probably won’t be a factor until next year at the earliest.

86% of Tesla’s earnings could soon come from autonomous robotaxis

Elon Musk is making a big bet on autonomous ride-hailing. The Cybercab, which will enter mass production in 2026, will run entirely on Tesla’s FSD software, so it’s designed to operate without any human intervention. In theory, that means it can haul passengers and even small commercial loads at all hours of the day, creating a lucrative new revenue stream for the company.

Scaling this business will come with challenges. I mentioned FSD isn’t approved for unsupervised use in the U.S. just yet, but Tesla will also have to compete with established ride-hailing giants like Uber Technologies, which has already partnered with 20 other companies in the autonomous driving space. Around 180 million people already use Uber every single month, so it’s in a much better position to dominate the autonomous ride-hailing industry compared to Tesla, which has to build an entire network from scratch.

However, Ark thinks Tesla will eventually make it work. Its forecasts suggest the company will generate $1.2 trillion in annual revenue by 2029, with 63% ($756 billion) coming from its robotaxi platform alone. Ark says that could translate to $440 million in earnings before interest, tax, depreciation, and amortization (EBITDA), with 86% attributable to the robotaxi because of its high profit margins — human drivers are the largest cost in existing ride-hailing networks, but the robotaxi won’t need them.

Don’t rush to buy Tesla stock just yet

In my opinion, Ark’s predictions are too ambitious. Wall Street thinks Tesla will generate around $93 billion in revenue during 2025 (according to Yahoo! Finance), so that figure will have to grow by almost 1,200% over the next four years to meet Ark’s forecast of $1.2 trillion — driven by a brand-new robotaxi product that hasn’t even hit the road yet.

Tesla’s valuation is another issue. Its stock is trading at an eye-popping price-to-earnings (P/E) ratio of 209, making it almost seven times as expensive than the Nasdaq-100 technology index — which trades at a P/E ratio of 31.6. Remember, Tesla’s earnings are currently shrinking, which makes its premium valuation even harder to justify.

Therefore, I’m hesitant to buy into the idea that Tesla stock could surge by another 615% over the next four years to reach Ark’s price target of $2,600. It might be possible if the company’s robotaxi platform becomes as successful as Ark predicts, but I think that’s unlikely in such a short period of time. After all, Elon Musk has promised unsupervised self-driving cars for the last 10 years, and Tesla still hasn’t delivered.

With Tesla shareholders set to vote on a proposed 10-year, $1 trillion compensation package for CEO Elon Musk in November, board chair Robyn Denholm spoke to The New York Times to defend what would be the largest pay package in corporate history.

Denholm, who was also on the special committee that put the compensation proposal together, argued that Musk needs to be motivated by extraordinary challenges tied to extraordinary compensation. At the same time, she suggested he’s less interested in the additional wealth that the promised Tesla shares would represent, and more in the voting power.

“I think it’s a little bit weird talking about the dollars when it’s actually the voting influence,” said Denholm, whom The Times described as “occasionally appearing ill at ease” during the interview.

It might also seem counterintuitive to offer such a massive pay package when Tesla’s profits and vehicle sales are falling, but Denholm insisted that the plan is about “future performance.”

“It’s not about past performance,” she said. “He gets nothing if he doesn’t perform against the goals.”

As TechCrunch previously noted, the package’s goals are considerably less ambitious than some of the promises Musk has made about Tesla in the past.

Months before a jury awarded a $242.5 million verdict against Tesla over its culpability in a 2019 fatal crash, the automaker had a chance to settle for $60 million. Instead, Tesla rejected that offer, according to new legal filings that were first reported by Reuters.

The settlement proposal, which was made in May, was disclosed in a filing that requested Tesla cover legal fees for the plaintiffs in the case.

Earlier this month, a jury in federal court in Miami found Tesla partly to blame for a fatal 2019 crash that involved the use of the company’s Autopilot driver assistance system. One person was killed when a Tesla Model S with Autopilot engaged plowed through an intersection and hit a Chevrolet Tahoe. The crash victims, Neima Benavides Leon and her boyfriend Dillon Angulo, were standing outside the vehicle on the shoulder at the time. Leon was killed while Angulo was severely injured.

The driver, who was not a defendant in this case, was sued separately for his responsibility. The lawsuit filed in 2021 against Tesla centered on Autopilot, which was engaged but did not brake in time to avoid going through the intersection. The jury assigned the driver two-thirds of the blame and attributed one-third to Tesla. As part of the verdict, the jury awarded the $242.5 million verdict as part of its decision.

Tesla, in a statement provided to TechCrunch earlier this month, said it plans to appeal the verdict “given the substantial errors of law and irregularities at trial.”

TechCrunch has reached out to the plaintiffs’ attorneys as well as Tesla. An outside PR firm that previously provided statements on Tesla’s behalf declined to comment and directed TechCrunch to the company’s press address. Tesla disbanded its communications team several years ago.

The lawsuit, case 1:21-cv-21940-BB, was filed in 2021 in the U.S. District Court for the Southern District of Florida.

Owners of Tesla cars will be able to add their vehicles to the company’s robotaxi network sometime next year, Elon Musk said on the company’s quarterly earnings call on Wednesday, potentially allowing hundreds of thousands of customers to make money by remotely renting out their cars as self-driving cabs. 

Elon Musk has reportedly fired Omead Afshar, Tesla’s head of manufacturing and operations in North America and Europe, according to Forbes. Both CNBC and Bloomberg corroborated the report. Afshar’s exit follows Milan Kovac, the head of engineering on Tesla’s Optimus robot, who left the company in early June.

Afshar was promoted to the role last year, Bloomberg reports, after working for multiple different Musk-owned companies since 2017. The timing of his exit isn’t particularly surprising given the trouble Tesla has faced selling cars. Sales in Europe have shrunk for a fifth consecutive month and the European Automobile Manufacturers’ Association reports that registrations of new Teslas dropped by nearly 41 percent in May. The company is also struggling in China, where sales fell 15 percent in the same month.

While Musk appears to be holding Afshar responsible, the blame clearly lies at Musk’s feet. Helping to fund President Donald Trump’s re-election in the US, running the destructive DOGE cost-cutting efforts after his election and just generally maintaining a noxious public presence have permanently tainted Musk and his companies. While SpaceX still benefits from government contracts, Tesla’s sales are vulnerable to public opinion, something the Tesla Takedown movement has been leveraging to its advantage with protests outside of the company’s dealerships.

Firing Afshar, leaving his position in the US government and launching Tesla’s robotaxi service in Austin are all different attempts from Musk to change the narrative around Tesla. It’s not clear yet whether they’ll actually help.

Tesla (TSLA 8.19%) and its CEO Elon Musk recently achieved a big milestone — they launched the company’s first self-driving robotaxis for paying customers in Austin, Texas. It’s an initiative that Musk first discussed in 2016. While it looks more like a soft launch, it’s still a big step for Tesla, which plans to launch a fully autonomous robotaxi fleet. Many investors think that could be a massive new business for the company that will justify Tesla’s monster valuation.

Still, Tesla has a lot going on right now. Remember, the company’s core business is still electric vehicles (EVs), and that business is facing a critical event in just a few weeks’ time.

Q2 EV Deliveries to soon be announced

Tesla is expected to announce its second-quarter EV delivery figures in the first week of July. As many investors likely recall, first-quarter deliveries came in at roughly 337,000, its lowest quarterly number in over two years. Many investors have been concerned that Musk’s close ties to President Donald Trump and his period of leading Trump’s Department of Government Efficiency (DOGE) have alienated a significant portion of Tesla’s potential customer base.

Image source: Getty Images.

While Musk has stepped down from his work with DOGE to refocus on his businesses, data thus far on Tesla’s sales in the second quarter has been less than encouraging. Monthly sales data from Europe showed that Tesla’s sales once again faltered in April in countries including the United Kingdom, the Netherlands, Denmark, Portugal, Sweden, and France.

Other data suggests that its sales in China have struggled in the second quarter as well. Aside from politics and brand image, Tesla may also be struggling there as a result of increasing competition from competitors like BYD, which has grabbed a dominant market share in China. BYD’s EVs are cheaper and its newest tech can charge faster than Tesla’s. These factors, in my opinion, will pose a bigger problem for Tesla than its brand or political issues, which are likely to fade over time.

Wall Street analysts are modeling for second-quarter deliveries of roughly 400,000, which would be an improvement from the first quarter, but a 10% year-over-year decline. However, some analysts don’t expect investors to care much if Tesla misses estimates.

“The Tesla narrative has increasingly turned to AV/Robotaxi, with investors likely more focused on the planned June 22 Robotaxi launch and Tesla’s path to scaling AV than on 2Q deliveries/overall fundamentals,” wrote Barclays analyst Dan Levy in a recent research note. Levy is modeling for 375,000 Tesla EV deliveries in the second quarter.

Other analysts are more concerned.

In early June, Wells Fargo analyst Colin Langan posted a research note suggesting Tesla’s deliveries in the second quarter were down 21% year-over-year on a quarter-to-date basis. Langan has a sell rating on the stock and a price target that implies a downside of more than 60%.

It’s also worth noting that Tesla has become a battleground stock, with some analysts extremely negative and others like Wedbush’s Dan Ives very bullish.

Will anyone care if Tesla disappoints?

At this point, there have been many negative headlines about Tesla’s EV deliveries in the second quarter, but the stock is up close to 24% quarter to date as of June 20.

As Levy mentioned, most Tesla shareholders at this point appear to be focused on future initiatives like robotaxis and Optimus humanoid robots. If Tesla does underperform on EV deliveries, I think it could suggest that the core EV business has a real problem and is being undermined by more than just Musk’s politics, which would present a fundamental problem for the EV business.

The stock may not fall much, but then investors will be heavily dependent on the performance of the robotaxi fleet, and reliant upon the Optimus robot business to scale up quickly as well. With Tesla trading at 168 times forward earnings, that bet is only becoming riskier for investors.

Looking back over the past decade and beyond, I don’t think there are many folks out there who would deny just how impressive Tesla‘s success has been. This innovative business, led by polarizing CEO Elon Musk, disrupted the global auto industry with its electric vehicles (EVs).

While the EV stock trades 32% below its peak (as of June 10), that’s still a gain of 1,810% in the past 10 years. That long-term performance made it one of the world’s largest tech companies, which is why Bank of America analyst Michael Hartnett gave it a spot in the “Magnificent Seven” when he introduced the idea of the group in 2023. However, I think it’s time to swap the EV maker out of this unofficial grouping and replace it with the more-deserving Netflix (NFLX -0.35%).

Image source: Getty Images.

Tesla’s struggles are hard to ignore

Over the years, Tesla shareholders grew used to seeing the company register jaw-dropping sales growth. The picture isn’t so rosy anymore, though. Its automotive revenue declined 20% year over year in Q1. In 2024, it reported its first-ever year-over-year drop in deliveries. And the company’s profitability has continued to slide as higher interest rates and a more competitive environment have put downward pressure on demand for its vehicles.

Musk’s push in the political arena might at first have been viewed positively by some investors, as he was positioning himself to have more influence in Washington, D.C., which could have benefited Tesla from a regulatory perspective. But both his time in President Donald Trump’s inner circle and his more recent exit from politics, as well as his highly public spat with Trump, have been huge distractions that have certainly damaged Tesla’s brand instead.

It’s safe to say that a company that was once in the fast lane is now stuck in traffic. Tesla will have a lot of work to do in order to get back to its prior glory.

Netflix just keeps winning

While Tesla faces a battle to get itself back on track, Netflix continues to flourish. The streaming stock is up 1,200% in the last decade. The company added 41 million net new customers in 2024, bringing its total to nearly 302 million at year’s end. While Netflix chose to stop publicly reporting the number of subscribers it has starting this year, it did increase revenue by 12.5% year over year in the first quarter.

It might seem like this streaming platform has saturated its market. However, co-CEO Greg Peters believes there are still “hundreds of millions of folks to sign up.” By continuing to focus on creating compelling content offerings all over the world, Netflix is in a position to keep its expansion going. Wall Street’s consensus analyst estimates are for its revenue to rise at a compound annual rate of 12.3% between 2024 and 2027.

The streaming industry, like the automotive market, is extremely competitive. Netflix co-founder and former CEO Reed Hastings previously said that he counts sleep among the company’s key competitors. I don’t believe this was a stretch. Netflix goes up against all the other activities consumers can do when it’s time to wind down and relax.

But to be more specific, people have an almost unlimited number of viewing options at their fingertips today. Netflix is in the lead, though. Data from Nielsen shows that Netflix commanded 7.5% of video viewing time in the U.S. in April, only behind YouTube, which isn’t necessarily an apples-to-apples comparison due to the latter largely featuring user-generated content.

With its massive subscriber base, and trailing 12-month revenue of $40 billion, Netflix has the financial strength to spend a lot on content and marketing. And it’s still able to bring in billions in free cash flow each year.

It’s important to highlight that the “Magnificent Seven” is not an official index like the S&P 500 is. However, with each passing quarter, Netflix continues to make the case that it deserves to be mentioned with the tech giants in that group. Given the streaming pioneer’s ongoing success, it belongs in that exclusive club instead of Tesla.