Major ETFs Face Tesla Earnings Test Amid AI Pivot

- XLY holds the highest Tesla weighting at 19% among the five major funds.
- The five ETFs posted one-month returns between 8.59% and 12.25%.
- Morningstar’s $400 Tesla valuation is based on Robotaxis and robots, not auto sales.

The narrative around Tesla has changed, according to Morningstar research. The firm’s $400 fair value estimate is now driven primarily by Robotaxis and humanoid robots rather than auto sales. That represents a shift in how analysts view the company’s value, putting pressure on fund managers to decide whether Tesla still fits their strategies.

Tesla historically carried a “Musk premium,” as the only scalable way to access Elon Musk’s vision publicly, according to Jake Behan, head of capital markets at Direxion. That premium could come under pressure as SpaceX moves closer to an initial public offering. The SpaceX IPO would create an alternative avenue for investors to express the Musk trade, according to Behan.

Cantor Fitzgerald initiated coverage of Tesla at overweight this week, citing expectations that autonomous capabilities will expand to European cities, according to CNBC reporting.

Meanwhile, Morningstar assigns the stock a narrow economic moat but a very high uncertainty rating. That reflects a wide range of potential outcomes, as Tesla invests heavily in robotaxis and humanoid robots with no guarantee the investments will generate returns.

Morningstar analysts are looking past traditional auto metrics, toward a $20 billion AI infrastructure bet. The focus has shifted to the Terafab compute facility and expansion of the Robotaxi network into seven new cities.

Five widely held exchange-traded funds count Tesla among their largest holdings. Each offers a different lens on the stock’s transformation from electric vehicle maker to AI infrastructure play.

The State Street Consumer Discretionary Select Sector SPDR ETF (XLY A) carries a 19% Tesla allocation, the heaviest among the five funds, according to ETF Database. The fund tracks the consumer discretionary sector of the S&P 500 Index, providing exposure to automobiles, broadline retail, and hotels and restaurants. XLY returned 10.6% over the past month.

Cathie Wood’s ARK Innovation ETF (ARKK B) takes a different approach, with a 10.6% position in Tesla. The actively managed fund seeks long-term growth through companies driving disruptive innovation.

ARKK posted an 11.9% one-month return, according to ETF Database. That performance reflects bets on Tesla’s AI and Robotaxi roadmap that CEO Elon Musk is expected to detail on today’s call.

Concentrated conviction drives the American Century Focused Dynamic Growth ETF (FDG C+). The fund maintained a 7.72% weighting through its buy-and-hold approach to high-quality growth companies. FDG delivered a 12.3% monthly return, according to ETF Database.

The fund targets 30 to 45 companies with competitive advantages and scalability, according to its factsheet. Its performance suggests active managers are finding value in Tesla’s AI infrastructure narrative ahead of the Terafab update.

Broader market exposure comes through the Invesco QQQ Trust (QQQ B), which allocates 3.8% to Tesla. The fund tracks the Nasdaq-100 Index. That index includes 100 of the largest nonfinancial companies listed on the Nasdaq Stock Market.

QQQ posted a 10.84% one-month return, according to ETF Database. Investors seeking Tesla within the context of other Magnificent Seven holdings gravitate toward this benchmark.

Rounding out the five funds, the Vanguard S&P 500 ETF (VOO A) represents the most passive, broad-market approach. The fund employs a full-replication strategy to track the S&P 500 Index. With a 1.9% Tesla weighting, VOO gained 8.59% over the past month, according to ETF Database.

The range of exposures across the five funds highlights how Tesla’s earnings will ripple through portfolios from concentrated sector bets to broad market benchmarks.

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